This paper seeks to build on the growing discourse regarding the strategic imperative for Israel to bolster its relations with non-aligned states in East Asia. Rather than expanding on the reasons for cultivating these relationships (this issue can be found in forthcoming JNI strategic papers), this paper will focus on the way in which Israel’s position as an energy transit hub can promote its standing among China and India (and possibly South Korea and Japan) and increase its own domestic energy security. By supplying countries such as China and India with reliable and secure sources of energy, Israel can advance its strategic position and relationship with these countries.
Concerns over energy security are at the top of Indian and Chinese foreign policy
calculus.The IAEA projects that by 2030, the energy demands of these two nations will increase by fifty percent. With oil costing more than $100 per barrel and concerns over the political volatility of major producing states such as Iran, Iraq, Nigeria and Venezuela, China and India are increasingly looking elsewhere to fulfill their domestic energy needs. With sufficient political will, Israel can play a critical role in this process by supplying these countries with oil from the Caspian Sea, namely from oil fields off of Azerbaijan and Kazakhstan.
Currently, there are already two operational pipelines that will contribute to this project. The first is the Baku-Tblisi-Ceyhan (BTC) pipeline, which transports oil from Azerbaijan’s Azeri-Chirag-Guneshli offshore fields, which hold proven recoverable reserves of 900 million tons of oil. The BTC is capable of transporting some 1 million barrels/day of Azeri crude to Ceyhan, Turkey’s energy terminal on the Mediterranean. Oil transported from the BTC would be the first stage in moving oil from the Caspian to Israel eastward.
From Ceyhan, tankers would be able to transport oil to the second operational pipeline, the Eilat-Ashkelon pipeline. Envisaged in 1968 as a means of transporting oil from the Persian Gulf northward, the “Tipline,” has been reversed southward and is capable of transporting oil from Ashkelon to Eilat and all points tinkering eastward. After being pumped to Eilat, oil would then be able to be shipped via the Red Sea to China and India. Pursuing this initiative is beneficial for China and India for three reasons.
Firstly, very little additional infrastructure is necessary for actualizing this initiative. Unlike the construction of a pipeline from the Caspian eastward, which requires significant time and diplomatic maneuvering between countries, supplying oil to India and China requires an increased tanker presence in the Red Sea. This is much easier to achieve than the construction of a pipeline. It is possible that the “Tipline” could be expanded to absorb more Caspian oil.
Secondly, tankers transporting oil through the Red Sea are able to hold more oil than those, which transport oil through the Suez Canal, the primary means of transporting oil via tanker from the Mediterranean. Whereas shipment through the Suez Canal is limited to tankers with a maximum capacity of 30,000 tons, the Red Sea can accommodate 280,000 to 320,000 ton-tankers.
Thirdly, transporting oil from Israel eastward will save East Asian oil importers time and money. The Eilat-Ashkelon Pipeline Company (EAPC) maintains that the amount saved by transporting oil without relying on the Suez Canal could amount to $4 per ton. It is also more time efficient to transport oil via the Red Sea rather than the Suez Canal.
Besides providing a foundation for advancing relations with China and India, pursuing this initiative will strengthen Israel’s energy security. The EAPC has approved the expansion of an oil reservoir on Ashkelon’s coast by twenty percent. Given the high price of oil, increasing its domestic reserves is critical for Israel.
Achieving this initiative will require serious effort on the part of Israel’s government. Although Israel’s minister of National Infrastructure Binyamin Ben Eliezer has said “Israel would serve as a bridging point for carrying oil to the Far East Markets of China, India and Japan,” sustained attention to pursuing this initiative is critical. Firstly, Israel should establish a working group consisting of energy officials from Azerbaijan, Georgia, Turkey, China and India. This group should begin working on a timeline for actualizing this project and developing contracts between countries. Despite the vocal support needed by high-level delegations, actualizing this initiative requires a pro-active approach.
Israel should also encourage Kazakhstan to join the BTC. The Kashagan oil field, the fifth largest in the world with total reserves-in-place around 38 billion barrels, is operated by a consortium whose major shareholders are ENI, Shell, Exxon Mobil and Total. Introducing oil from Kashagan into the BTC would also contribute to helping China and India meet their energy needs.
Only by taking a proactive position will Israel be able to properly pursue this initiative. Besides engaging with the previously mentioned group of energy officials, Israel should also engage with the major companies operating oil fields off of Azerbaijan and Kazakhstan. This, in order to know exactly how much oil Israel could potentially transfer, whether additional technology will be necessary in Israel (does the “Tipline” need to be expanded), and what transit fees Israel can expect to collect.
