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Israel's energy sector is going through momentous changes due the development of its large offshore natural gas reserve. Last week, Greek oil and gas company Energean introduced a new element of competition into the country's domestic gas market by signing contracts for its two Israeli fields, and earlier this year the country started exporting gas to neighboring Jordan, albeit in initially small quantities. There are high hopes that Israel's substantial proven reserves, as well as the likelihood of future finds, will change not only the economy but also the geopolitical situation in the region, with Israel potentially becoming an exporter also to Egypt, Turkey and even to Europe. Yet, a combination of that same geopolitical situation, low natural gas prices, the lack of an export infrastructure and regulatory issues may temper such dreams, say experts. Exports are crucial to attracting major international players to Israel's gas exploration and production sector, says Roee Zass of Tel Aviv-based TASC, which has extensive experience consulting in the Israeli energy sector. "The Ministry of Energy has understood that exports are crucial and is trying to assist but infrastructure and geopolitics is something that takes years and there are lots of obstacles on the way," says Zass. The real measure on Israel's gas potential may come next month, when it becomes clear what companies are bidding for on a tender for oil and gas exploration in 24 additional blocks that are generally thought to hold significant possibilities. Yet, the deadline had to be postponed from April, indicating tepid interest from major international players.

Israel went within the space of 10 years from a country that hardly even consumed gas to a major producer that's eyeing significant export opportunities. The country's first offshore gas field in the Mediterranean Sea, Yam Thetis, came online in 2004, followed by the much larger Tamar field in 2013. Both are majority owned by a partnership between Israel's Delek and the U.S. firm Noble Energy and almost exclusively supply the domestic market. The real game changer, making Israel potentially a natural gas player, was the discovery of Leviathan in 2010. It is estimated to hold at least some 500 billion cubic meters (BCM) of gas and is expected initially to be able to produce 12 BCM annually starting in 2019. Noble Energy decided to go ahead with development of Leviathan earlier this year after a protracted political and regulatory wrangle in Israel over competition and prices was settled in 2016, and after a major export contract was signed with Jordan.

Israeli Prime Minister Benjamin Netanyahu attends the weekly cabinet meeting at his office in Jerusalem March 5, 2017. Abir Sultan | Pool | Reuters