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Qatar to sell gas to Israel ‘below cost price’? 7, May 2011

Posted by thegulfblog.com in Israeli-Palestinian Conflict, Qatar.
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There have been various rumblings recently that Qatar will soon be selling gas to Israel. Partly to make up for any lack of gas coming from Egypt and partly because Qatar have been trying to sell gas to Israel for decades.

One of the more alarmist stories, so to speak, notes that Qatar may well be selling gas to Israel soon “below cost price”. If a deal like this comes to fruition, many will suggest that Qatar is doing this under US pressure. Indeed, this would make sense. However, I’m not so sure. Not only are US-Qatari relations getting significantly better now by themselves; not only does Qatar not really need good US relations (indeed, it’s managed perfectly well with poor American relations for years now) but Qatar has on many on occasion sought independently to resuscitate its relations with Israel.

After the Israeli trade office closed after Operation Cast Lead, there have been at least two Qatari gambits to Israeli to solicit them to reopen it in return for access to Gaza for humanitarian goods. Both were rejected by Israel.

So why does Qatar seemingly so often seek Israeli support, particularly when it, at the very least, causes friction within the GCC and with Qatar and Iran?

– It’s the right thing to do. I’ve talked about this before, but there is something of a belligerent, bloody-minded streak to Qatar’s foreign policy. Despite the apparent drawbacks of a policy, if Qatar’s elite genuinely thinks that it is the right thing to do then, ceteris paribus, it will be done. To my mind, restarting relations with Israel is a sensible, mature and intelligent thing to do.

– Limelight. Many a time have I prattled on about this. Qatar courts international public opinion frequently and with great success. Interestingly, in such a case, they are clearly not courting Arab public opinion, the majority of which would – presumably – be against such normalisation. Hence, they are therefore playing to the Western crowd, to some degree, with this policy.

– Business. Israel is the best run and most advanced economy in the Middle East. If it’s true that Qatar is using its gas as a loss-leader (which I doubt…) then someone must, to my mind, have their eye on a larger trading prize, so to speak, with Israel.

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1. Ahmed - 8, May 2011

The question that needs to be asked is what can Israel provide to Qatar?
If it is an economic decision to increase gas exports then when should remember that Israel is not a huge prospective market to Qatar. Additionally, hydrocarbon exporters tend to not care who they are exporting to, the highest bidder wins the order. We should also bear in mind that Israel has found some very large gas fields in the Mediterranean, smaller scale endeavours have been under way for many years now but fields like Leviathan are big on a global scale. Israel, since discovering this gas (and oil) is preparing to export its own natural gas in the near future, so why would they wish to import it? If Qatar’s aim is to re-establish some sort of relations with Israel in order to be allowed to engage in humanitarian work in Gaza then we should consider two things. Firstly, Israel will not risk its national security by importing natural gas from Qatar even if it is below cost. There are two reasons for this. Secondly, the political change in Egypt appears to be more supportive of Gazans, unlike the Mubarak regime. If it is a question of access to Gaza then the ports of Egypt are open as is the Rafah border crossing. Going back to Israel’s national security, the two reasons are:
A) This oil will be coming through the Persian Gulf/Strait of Hormuz. This will effectively make Israeli natural gas supplies hostage to Iran’s willingness to close or not close the Straits of Hormuz by whatever means. The second reason is the obvious one, which country, given the chance to be self-sufficient in terms of energy production, would not attempt to do so? Why depend on an Arab country of all possibilities? To me at least, it would be strategic folly for Israel to agree to such a deal. I won’t even mention the obvious ramifications for Qatar.
Now we get to the question, why below cost? The offer may be lucrative, but it poses the following dilemmas to Israel: A) how long will this dream last B) what are the conditions C) is this a better idea than having our own gas production and exports?
I would say, based on today’s realities and the prospects of the future, it would not be in Israel’s interests especially in a time of such great uncertainty in the Middle East and North Africa region.
Back to economics. What does Israel offer Qatar that requires Qatar to provide such a lucrative offer in order to wean Israel to trade with it? Fruits and vegetables? flowers? Hebrew literature? military goods (this is out of the question for Qatar even if they gave free natural gas)? Source of FID? (um, not needed I presume)
The only trade goods I see that Israel has and Qatar wants is technology to have agriculture and aquaculture in the desert. Israel is the undisputed master in this field and Qatar is desperately trying to solve its food security issues. I dont know how far the Qatari rulers are willing to go to meet this goal, nor do I know how they calculate the pro’s and con’s for it on national and international policy. What I do know is that this is not a reason warranting the obvious ramifications. There are many sources for this technology and Qatar is already working with Japanese and Spanish firms. It’s not hydrogen fusion that Israel has, other sources can provide equally good solutions with R&D investment, and that’s not something Qatar will find difficult to provide.

thegulfblog.com - 8, May 2011

Superb stuff. I couldn’t have put it better myself. Many thanks!


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