Briefing of VP Tajani

travelling to on 21-23 October on a Mission for Growth,

on EU-Israel cooperation in the field of Energy

______

Line to Take

• Our cooperation in the energy area has been significantly upraised notably in the context of: o the latest gas exploration activities offshore in Israel and perspectives of reaching the European markets, o the market reforms that take place in the electricity sector in Israel as in the EU, o joint activities for the promotion of Renewable Energy and Energy Efficiency activities o the regional cooperation as promoted in the frame of the Union for the Mediterranean and its Mediterranean Solar Plan programme;

• An Ad-hoc "EU-Israel Energy Dialogue" platform for exchanging information and views and of facilitating EU – Israel cooperation in the energy sector, has been established; the 1st group meeting took place in July 2013 and the next meeting is planned for early 2014;

On gas exploration developments

1 • We are aware of the cabinet's decision (of 23 June 2013) on the Policy Regarding Natural Gas in Israel and the decision to export 40% of the available volumes within the next 30 years. However, we understand that discussions are going on in the Knesset . We would be interested to know more on the outcome of the discussions between the government and the Knesset, and how this affects the government's decision.

• The EU supports cooperation between Israel, Cyprus, Turkey and Greece in the region regarding plans of the exportation routes (pipeline to Turkey, links to the future LNG facility in Cyprus etc.).

On offshore safety

• Inform that we are in discussions with the government in setting up a twinning project on offshore safety. We also propose to organise with Israel an expert seminar on offshore safety in early 2014.

On infrastructure developments

• The EU process to identify energy infrastructure projects of common interest (PCIs) has been completed. A project connecting Israel, Cyprus and Greece (Crete) (EuroAsia electricity interconnector) is likely to be part of the first Union list of PCIs, which will be adopted in mid-October 2013.

On the Mediterranean Ministerial Meeting on Energy – Brux – Dec 11

2 • The Union for the Mediterranean Ministerial Meeting on Energy will take place in Brussels on 11 December which is being prepared by the UfM co- presidency (Jordan and the Commission on behalf of the EU)

• The Ministerial will cover three topics: • Mediterranean Solar Plan: Ministers will endorse this document, • acknowledge the role of MEDREG and MED-TSO and will invite them to develop their action plan. • have a first orientation debate on the future perspectives of the Euro- Mediterranean partnership in the energy sector, including the notion of a Mediterranean Energy Community

3 III. Background

Development of gas sector in Israel

• In March 2010 the U.S. Geological Survey announced that 1,7 billion barrel of recoverable oil and 122 trillion cubic feet (3450 Bcm) of gas lay in the Levant Basin. (As a yardstick EU 27 consumes around 500 Bcm/year).

• Israel exploits Mari B (10.8 Bcm) since 2004 and is starting to develop NOA (1.2 BCM) for domestic use, mainly electricity generation. Both fields are part of the Yam Tethys joint venture between (USA) and Energy Systems (IL).

• In the last couple of years Noble Energy discovered Tamar (240 Bcm), Dalit (14 bcm), Dolphin (2 Bcm) and Leviathan (550 Bcm) fields, plus some smaller ones in the Israel Exclusive Economic Zone (EEZ). Sarah and Myra (180 Bcm) have not yet been explored and are therefore more uncertain.

• The yearly consumption of gas in Israel is approx. 5 Bcm/y. In 2010 half was domestically produced and half was imported from Egypt trough the . During 2011 and beginning 2012 a dozen explosions caused interruptions of supply; in addition criticism grows within Egypt new government about terms and conditions of the gas supply contracts. Egypt is no longer a reliable gas supplier for Israel.

• The state-owned gas distribution company Israel Natural Gas Lines signed a US$ 140 million contract with the Italian Micoperi to build a 2.5 Bcm/year floating LNG facility in the port of Hadera. The facility could be operational by end 2012 as a stopgap solution until Tamar gas will be available.

• In principle Tamar is reserved for Israel domestic consumption, while the larger Leviathan may be destined to exports. Although EU looks the most natural market for the gas (only four days to ship LNG from Hadera to Trieste) Israel is considering India and China as possible markets: the reason could be economic, since wholesale prices are higher in eastern markets, but might also be political.

• Should Israel chose eastern markets, it would have to bring its gas onshore by means of a subsea pipeline, then transport it until Eilat, where a liquefaction plant can be built. This would give access to the Indian Ocean without having to cross Suez Canal, but it will take more than 20 days for a LNG tanker to reach China.

• On 23 June 2013, the Israeli cabinet approved a decision to reserve 540 bcm of natural gas for the next 29 years for the domestic market. Since current estimates of Israel's natural gas reserves are 900 bcm, this means that 40% (= 360 bcm) would be available for export.

4

Israel, Cyprus discussions on gas supplies

• Israel and Cyprus held talks on transporting natural gas from the Tamar offshore field to Cyprus.

• Initial production levels at the Tamar field are expected to be 7 bcm and increase to as much as 11 Bcm a year by 2020.

• Cypriot council of ministers authorized DEFA, the state owned Natural Gas Public Company, to prepare a tender for transporting gas to the island

• Israel, Greece, Cyprus mull energy corridor to facilitate future gas exports to Greece from Israeli and Cypriot reserves.

• On 8 November 2012, Israel, Greece and Cyprus met to set up working groups to examine the possibility of a power cable and an energy corridor connecting the countries. This was agreed at a meeting held in Cyprus between Minister of Energy and Water Resources Uzi Landau, the Cypriot minister of industry and commerce and the Greek deputy energy minister.

• The energy corridor is intended to enable future exports of gas from Israeli and Cypriot reserves to Greece via a pipeline, liquefaction installation, or other technology. At the meeting, Landau said that Israel's policy on gas exports had still not been determined, and was waiting on adoption by the government of the Tzemach committee recommendations.

• Some progress was made on the subject of the power cable: Israel Electric Corporation, in cooperation with the Public Power Corporation of Greece, is carrying out a feasibility study with the aim of establishing whether laying a power cable is a worthwhile project, economically and from an energy point of view, for Israel.

5 EU-Israel Energy Cooperation

Bilateral Agreements

The main EU-Israel agreements relevant to the field of energy are the Association Agreement which came into effect in 2000 and the European Neighborhood Programme Action Plan which came into effect in 2005 and will expire in June 2010.

The energy article of the Association Agreement focuses on cooperation in the field of renewable energies and speaks of encouraging regional cooperation on the transit of gas, oil and electricity. The energy section of the Action Plan focuses on cooperation in the context of Israel's preparation of an energy master plan, exploring possibilities of regulatory convergence, assessing the scope for Israeli integration into Trans-European/Mediterranean energy networks, cooperation in Israeli efforts to increase energy efficiency and reaching its goal of "by 2007 at least 2% and by 2016 at least 5% of electricity to be produced from renewable energy sources". The Action Plan also mentions "taking steps towards Israel's participation in the Intelligent Energy-Europe programme" and developing regional cooperation.

Israel has been fully associated1 to the Framework Programmes for Research and Technological Development since 1996. A Memorandum of Agreement with the Joint Research Centre to encourage "joint and cooperative initiatives relevant for the peaceful use of nuclear energy" was signed in 20082.

Israeli Participation in EU Programmes and Projects

Israel participates actively in the Euro-Mediterranean energy programmes including the MED- EMIP Energy Cooperation programme which is a platform for energy policy dialogue and exchange of experience, the MED-ENEC II programme for energy efficiency in construction, MED-REG II which aims at strengthening cooperation between energy regulators and "Paving the Way to the Mediterranean Solar Plan" which is assisting the EU, the Mediterranean Partner countries and the Secretariat of the UfM in the preparation of the Action Plan of the Mediterranean Solar Plan (MSP). Israel participates in the Euro Mediterranean Energy Forum, an association formed at the initiative of MEPs, as well as the Euro-Mediterranean Energy Ministerials.

Israel makes use of the TAIEX (Technical Assistance and Information Exchange) instrument. The Ministry of National Infrastructures has initiated workshops, seminars or expert visits in the following areas: • Advancing energy efficiency and renewable energy • European experiences on advancing energy efficiency and renewable energy • Forecasting Energy Demand • Energy Efficiency in Buildings • Non-Kyoto Trading Mechanisms

Research and Development

Israel has been associated to the Framework Programmes since 1996. The chief scientist of the Ministry of National Infrastructures was one of the first Israeli participants in the energy sector of the programme. Although Israel at present recoups more than it contributes to the FP programme, it expresses disappointment with its level of engagement.

1 Except for the Euratom section 2 This is a "discreet" agreement which has not been given publicity.

6 IL has a good performance in the EU-IL R&D cooperation in the field of energy – out of 13 candidate and associated countries, IL was the second in terms of funding received. IL wants to get involved in the Strategic Energy Technology (SET) Plan program.

Regional Cooperation: EUROMED /Union for the Mediterranean The Union for the Mediterranean (UfM) was created at the Paris summit of Euro-Mediterranean Heads of State and Government on 13 July 2008. UfM is the framework of multilateral relations between the EU and all Mediterranean non-EU countries. The Energy Ministerial of the UfM is planned on December 2013. It is envisaged that Ministers will endorse the Action Plan for the Mediterranean Solar Plan in this Ministerial meeting.

Other International Cooperation

The International Partnership of Energy Efficiency Cooperation is an international initiative that Israel could possibly become member of. IPEEC was established in June 2008 by the Commission, the G8, China, India, Japan and South Korea. It is a forum for enhancing and coordinating efforts to accelerate the adoption of sound energy efficiency improvement practices. IPEEC is hosted by the IEA.

7