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What do Israelís Mediterranean natural gas resources mean for the regionís economy and security?

Question submitted by Larry Davenport, from Virginia Beach, Virginia, June 13, 2013

Answered by: Meghan L. O'Sullivan, Adjunct Senior Fellow

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Israel has discovered substantial natural gas deposits off its shores in the last four years. While these gas finds are not significant in terms of global gas supply (they constitute less than two percent of the world's proven gas reserves), they do appear large enough not only to meet Israel's needs, but to enable Israel to export significant quantities. These discoveries are a great boon for Israel, a country where gas consumption is steadily rising and there are ambitions to be a leader in gas-powered vehicles. Moreover, if Israel were able to export to its gas-thirsty neighbors, it could alter regional dynamics by making Israel and its neighbors mutually dependent and demonstrating to Arabs the benefits of peace with Israel.

There are, however, significant obstacles that need to be overcome before Israel can realize this vision. For starters, Israelis are actively debating whether the export of gas should be a priority, or whether it is better to keep Israeli resources in reserve for domestic use. In addition, the dispute over the maritime border between Israel and Lebanon—two countries still at war with one another—and some Lebanese claims over Israeli fields, raise security issues and have dampened the enthusiasm of foreign firms with the technical expertise needed to extract Israel's deep-water resources. Finally, while there are many export options—from pipelines to liquefied natural gas—all of them have at least some political, financial, economic, environmental, or security complications.

Time may be of the essence in terms of resolving these problems, as more and more sources of natural gas are being added to global supply, potentially lessening the commercial attractiveness of the Israeli finds.