An Interesting Development In The World Of Energy

Yesterday Hot Air reported that Israel has discovered a natural gas reserve off its coast.  The field is estimated to be about sixteen trillion cubic feet of natural gas.  At this point I must issue a disclaimer–I am a stockholder in a company called Zion Oil and Gas that is drilling for oil in Israel.  I firmly believe that the Middle East oil resources are probably not limited to Arab lands.  Anyway, the article at Hot Air deals with the potential impact of the discovery of this field of natural gas on Middle East politics.

The Wall Street Journal also reported on this discovery.  Ratio Oil Exploration LP, an Israeli oil firm, owns a 15% stake in a giant offshore gas field called Leviathan, operated by Houston-based Noble Energy Inc.

According to the Wall Street Journal article:

“Noble confirmed its earlier estimates that the field contains 16 trillion cubic feet of gas–making it the world’s biggest deepwater gas find in a decade, with enough reserves to supply Israel’s gas needs for 100 years.

“It’s still early days, and getting all that gas out of the seabed may be more difficult than it seems today. But Noble and its partners think the field could hold enough gas to transform Israel, a country precariously dependent on others for energy, into a net-energy exporter.”

This is what you would call a mixed blessing.  The economy of Israel will receive a tremendous boost as this natural gas field is developed.  (The Israeli government is already trying to retroactively raise taxes on energy companies!)  The article reports:

“Earlier this year, Finance Minister Yuval Steinitz said he was considering changing terms retroactively–meaning the government could extract better terms on previously assigned leases. Noble and Israeli oil executives went on the offensive.

“A retroactive change would be “egregious” and “would quickly move Israel to the lowest tier of countries for investment by the energy industry,” Noble’s chief executive, Chuck Davidson, wrote Mr. Steinitz in April.

“The company enlisted high-level negotiators, including the U.S. State Department and former President Bill Clinton, to lobby against any change.

“Mr. Clinton raised the issue in a private meeting with Israeli Prime Minister Benjamin Netanyahu in New York in July, according to a Clinton aide. “Your country can’t just tax a U.S. business retroactively because they feel like it,” the aide said Mr. Clinton told Mr. Netanyahu.

“Mr. Netanyahu was noncommittal, the aide said. A spokesman for Mr. Netanyahu declined to comment on the meeting.”

Maybe President Obama should rethink the way he has been treating Prime Minister Netanyahu!  The situation in the Middle East just got more complicated–Lebanon is also exploring offshore for gas.  We have added a ton of potential money and energy to an already unstable situation.  That may not be good.