Israel-Gaza Conflict Could Slow Natural Gas Investment in Area

The fighting between Israel and militants from Gaza could be a blow to the ambitions of Israel and the wider eastern Mediterranean region to become a hub for exporting natural gas to Europe and elsewhere.

Those aspirations received a lift when Chevron, the American energy giant, acquired stakes in two large Israeli offshore gas fields when it bought Noble Energy in 2020 for about $4 billion. Nobel Energy had led the way in developing Israeli gas.

Natural gas fields off the Israeli coast now account for about 70 percent of the country’s electric power generation, reducing the use of polluting coal. The gas has also helped Israel ease what had been a heavy dependence on energy imports.

Those facilities have tight security, although one of the Chevron-operated production platforms, called Tamar, is about 15 miles off Ashkelon, a city in southern Israel, and could potentially be vulnerable to attacks originating from Gaza.

During fighting in 2021, the Israeli government instructed Chevron to temporarily shut down Tamar.

In a statement this weekend, Chevron said it was “focused on the safe and reliable supply of natural gas for the benefit of the Israeli domestic market and our regional customers.” The company referred questions on the continuing operations of the facilities to the Israeli government.

Chevron has been working on plans to expand production at these units, called Leviathan and Tamar, and to add pipelines to help increase gas flows from Israel to Egypt, which indirectly exports Israeli output in the form of liquefied natural gas from facilities on the Mediterranean coast.

Chevron is also considering installing a floating facility to process liquefied natural gas in Israeli waters, a project that would cost several billion dollars. Along with Israel, Chevron is also active in Egypt, a major gas producer and consumer, and Cyprus.

The fierce fighting that started on Saturday could potentially slow the pace of investment in gas fields in the region.

It could also hamper Israel’s efforts to attract more international energy companies to drill for gas. The hope had been that Chevron’s arrival in Israel would open the way to other large international energy companies to invest there.