COOPERATION IN THE MEDITERRANEAN AND THE MIDDLE EAST:

ENERGY PROJECTS IN THE FRAMEWORK OF MIDDLE EAST PEACE TALKS

October 1994

State of Israel

Ministry of Energy and Infrastructure

PIPELINES FOR THE CONVEYANCE OF PETROLEUM AND NATURALGAS

A survey which was conducted by the Hammer Institute found that there are five pipelines for the conveyance of oil or gas which have potential economic advantages. Pipelines can be laid from Kuwait, the Persian Gulf and Saudi Arabia to the northern point of Eilat/Aqaba and from there to Ashkelon, connecting to pipelines to the Mediterranean ports. One export port recommended in the Mediterranean is a new port to be built in Gaza, either as a fuel port or in conjunction with a deep water port to be built there. There is economic feasibility in exporting Gulf oil to the Mediterranean ports through the Negev and Gaza or Ashkelon. The renovation of the Tapline and flow of the oil through Haifa are also feasible.

Development of an oil port on the shores of the Mediterranean (separately or together with a deep-water port) will enable export of 60-70 million tons per year of oil from the Gulf region to Europe. The investment required to undertake the construction of the projects related to exports of 60-70 million tons of oil ranges from 1.6 to 1.8 billion dollars.

In addition to the survey’s recommendations mentioned above, it is worthwhile considering the possibility of building an additional refinery in the east Mediterranean region whose production will be marketed in the region or will be slated for export. Setting up a refinery in Gaza and the possibilities of importing crude oil to the refineries in Haifa and Ashdod through oil pipelines, will allow the establishment of a corrective environment in the refinery segment in the Middle East and the Mediterranean Basin with some of the production marketed in the region and the balance being exported.

In addition to the pipelines from the Persian Gulf and Saudi Arabia to Mediterranean shores, recommended in the study, Israel is considering laying gas pipelines from Egypt and/or the Gulf States. There have already been positive contacts and discussions concerning this possibility. If the plans are implemented and the C.I.F. costs of imported gas will be attractive, this can bring about a revolution in the supply of electricity in our part of the Middle East (namely Israel, the Palestinian Autonomy and Jordan).

There are two principal reasons which raise the interest in natural gas:

a. Natural gas is one of the cleanest commercial fuels, which unlike other fossil fuels, does not produce ash residues or sulfur-dioxides in the combustion process. Thus, it provides means foe lessening, air pollution and other environmental problems, such as the danger to the pollution of ground water.

b. It diversifies the possibilities for electric power generation.

It will be possible to convert present electricity power production systems, based on coal and fuel, to gas, which will improve the environment, save emission, land, completion time and control devices and reinforce the use of ignore efficient units such as combined coal plants. This development will encourage the formation of an efficient and competitive structure, in electricity supply markets for the benefit of the neighboring countries in the Middle East and around the Mediterranean Basiri. Through the interconnected grid the electricity could be exported to Europe.

ELECTRICITY GRIDS LINK-UP

One of the projects which is both economically rewarding and politically significant is a linking-up of several national electricity grids together.

The natural participants in such a project which in principle can be promoted into practical phases in quite a short time are Egypt, Israel, Jordan, Saudi Arabia and the Palestinian autonomous entity. In a later stage it may prove also feasible to have Syria joining this venture. This connection of electricity grids will be a link in the great Mediterranean electricity ring, combining the South European countries: Turkey, the Mashreq and the Maghreb countries. The first link of this connection was already decided upon between Israel and Jordan in the Peace Treaty between the countries.

Connecting the grids will permit a dependable supply level, thus laying an infrastructure for the electricity market and increasing the competition in providing electricity. In this connection, I would like to point out that at present Israel supplies all the electricity to the Palestinian Autonomy. We offered and still are offering cooperation in this field to the Palestinian Electricity Authority.

The creation of a Mediterranean and Middle East electricity grid will benefit a population of some 300 million people who live in the Middle East and on the shores of the Mediterranean. Building such a bridge will necessitate a strong commitment and a willing spirit of cooperation between all the nations in the Middle East. A beginning was made to achieve this end. At present an agreement has been signed between Turkey, Egypt, Jordan and here again, the first steps have been taken to establish the physical connections.

In the macro view of the future, the tripartite connection between Egypt, Jordan and Israel and the possibility of future connections to Syria and Turkey will be a strong fulcrum on the eastern coast of the Mediterranean and will enable both reliability and viability for this grid. We hope that this project will materialise in its full extent and I pledge full Israeli support and cooperation towards this end.

In early 1993, a Joint European Community-Austrian delegation carried out a planning survey in the region and reached the conclusion that linking up the transmission grids can lead to significant economic benefits to all concerned countries.

There are two principal ways by which these benefits could materialize:

A. It saves the cost of damages which are inflicted by technical supply failures. In Israel, the damage caused to the GDP by failing to supply 1 KWh is estimated at $3 worth. Israel consumes approximately 20 billions KWh a year and "loses" approximately 25 million KWh, most of it due to transmission failures; thus, if it could save, say, 50% of these losses by having access to alternate sources of electrical power and transmission routes it could add about $35 million to its GDP. The prospective savings are probably even more significant for states like Egypt, which has a larger economy and higher rates of power failures.

B. The linkup of several national electricity grids enables any member state of the integrated grid to buy electricity from other members when the demand it faces exceeds its available installed power-generation capability. This saves the high cost of resorting to the normal backup option, namely, the activation of costly to operate backup generation plants. Since the probability that two member states or more will face peak demands at the same time is low, the state which suffers the peak demand would almost always find available reserve power to buy.

Once the project gets into an actual joint planning stage, one can expect that the joint technical work will raise some additional ideas of technological improvements which may prove mutually beneficial to the partners. Among these we would count the improvement of quality, reliability and availability of electricity, development of new and modern transmission lines, etc.

OIL-SHALE UTILIZATION FOR ENERGY PRODUCTION

During the last two decades Israel has gained much experience through the exploitation of the oil shale deposits in Israel. Oil shale is the most abundant fossil energy resource discovered to date in Israel. The estimated reserves are about 12 billion tons of oil shales.

For the past decade, PAMA, a government-owned company, has been involved in the development of shale will production in Israel. PAMA’s efforts to develop shale oil for power production have been focused on two main lines of activity: the development of commercial technology for shale oil derived fuel production (retorting), and the development of commercial technology fossil shale combustion. Analysis showed that these oil shales contain about 12-20% of kerogon that can be processed as replacement for crude oil.

A pilot plant for the production of electricity and steam by direct combustion of oil shales was built by PAMA in the Negev south of the town of Arad. The plant started operation in 1989 and today produces 5 megawatts of electricity and 50 tons of steam per hour. Electricity is fed to the grid and steam is utilized by the Rotem Company fertilizer plant located near the power plant. The lessons learned from the operation of this power plant demonstrate that building a large oil shales fired power plant using Israeli low calorific value oil shales, is indeed feasible.

The Israel Electric Corporation (I.E.C.) is now considering building additional oil shale-fired power plants, in modules of 75 megawatts. A total of 1,000 megawatts of oil shale-fired power plants is envisaged. Many foreign companies show interest in building these oil shales plants and are willing to build the plants in "build own-operate" mode or in any other mode agreeable to the I.E.C.

According to recent estimations, there are about 12 billion tons of oil shale located in Israel, and about 40 billion tons in Jordan. This is the only major fossil fuel resource found so far in those states. Although the shale is of poor quality, containing just about 10-20% of viable organic material, the above quantity is so huge that it can potentially fulfill energy needs of both countries for a long period.

An important incentive – actually a pre-requisite for cooperation in this field – is the fact that the shale in both countries are of a similar character and quality. This factor has been determined through independent research.

The available technology today has been developed sufficiently to exploit this resource for production of electricity, in commercial quantities, through a cost-effective process. The low cost of coal, together with the high investment cost in shall plants, make the actual utilisation of that resource a challenge.

There is a clear economic interest for both Jordan and Israel to have the oil shale utilisation developed as an option for the long term. At some future point the use of the usual fossil fuels may turn to be very problematic, whether because of political or of an economic crisis. The use of coal may also become more and more difficult due to a lack of easy solution to the problem of ash disposal. Another possibility is that the need to avoid further polluting developments of the power generation system which will make the oil shale usage – the combustion of which is practically sulfur free – a preferable option.

A CANAL TO THE DEAD SEA

The concept of carrying water through a canal from the Mediterranean Sea or from the Red Sea to the Dead Sea and utilizing the difference in elevation for the production of electrical energy, has been thoroughly investigated and evaluated during the last 20 years.

There are several alternatives, distinguished from one another by a number of aspects: route, size of the seawater conveyance and auxiliary utilities. Some of the alternatives have already been studied in the past and some have recently been re-examined. Despite the need to reexamine some of the parameters the recent review points to techno-economic possibilites which in contrast to past studies place stress today on desalination of seawater and this will be the main function of the water conduit.

There can be no better timeframe to restart the activities regarding the proposed water conduit since it has been said that there will be no peace if the water problem is not solved. And so, we now have the chance to set up a joint project which according to estimates may solve the water problem within 20 to 30 years for Jordan, the Palestinians and Israel.

Calculations on the capability of the water conduit point to the possibility of desalination up to 800 million cubic meters of water per year while the use today in Israel, Jordan and the Palestinian Authority is around 1.5 billion cubic meters of water per year. This additional water will add 50% to the water sources we have available today. This new source can easily be divided between the nations of the region. We have agreed air ad to conduct a feasibility study for the Red Sea Dead Sea canal, the Med-Dead canal and the, Northern alignment from Haifa to the, Jordan valley.

The scope of the investment in the inter seas canal considering the dimensions of the projects, the technology necessary for the design of the water conduit and the desalination plants, the efficiency and the cost of financing during construction and land development, may range from 1.5 to 3 billion dollars. The price of the water is assessed to be betweens 50 60 US cents per cubic meter of potable water and much less for agricultural applications.

The results of the investigations show that other real benefits can be gained by such a conduit, such as:

– The ability to base on the canal an electrical 800 Megawatt power plant. Apart from the benefit of high power energy production, it has the benefit of clean energy production and of the diversification of the energy resources and desalination.

– The ability to refill the Dead Sea, the surface of which has been constantly lowering in the last years. The refilling will enable the continuation of production of the huge amounts of potash and other natural resources from the Dead Sea, which are very important to agriculture and industry throughout the world.

– More projects and economic activities which can develop based on the canal are: tourism, recreation, etc.

Above all these, either of the three possible canal route alternatives makes possible a joint project between Israel and other participants in the peace process.

Such joint projects serve as a real base and stabilized for peace between the participants in the project. The decision on the canal to be built

(Mediterranean Sea – Dead Sea or Red Sea – Dead Sea) will be taken as the peace talks between Israel and its neighbours proceed. Anyhow, feasibility and techno-economic studies that still have to be made and the possible resources and investments expected for the project will be among the main parameters to be considered. The expected benefits from the project and its high economic value, as well as the value of related projects that will be based upon it, make any cooperation and participation in the project very rewarding.

SOLAR ENERGY PROJECTS

Israel has established a very good record in utilization of solar energy by the use of the most modern technologies and know-how. Very advanced technologies in this area have been developed in Israel, mainly by the Weizmann Institute and by two private companies, Luz and Ormat.

The technologies developed by the Weizmann Institute and the Luz and Ormat companies in Israel are on the verge of commercialization or are completely commercialised. We recognise the importance of the Maghreb countries as a solar energy source for all Europe in the future and would like to participate in this venture as a full partner providing our best technologies to this superb effort.

More specifically we can point to the following solar energy projects:

* Solar Power Plant: Following the success of the Luz-designed power plants in the California desert, a power station of 85 megawatts based on Luz-developed technology is planned for installation at the Ein Avrona site north of Eilat. The plant will allow the delivery of clean electricity to areas close to the site (Jordan, Egypt and perhaps Saudi Arabia). The station may serve, among other purposes, for a training center for solar research as well as for solar power station operators.

As with the SEGS plants, a back-up boiler, fired by conventional fuel, will be integrated with the solar field and power block, required for start-up, balance and for back-up purposes, and which could enable the plant to operate also during non-solar hours.

Similar units or even much larger ones, could be built in the North African and Middle Eastern countries having very good insolation conditions with the possibility of selling the excess electricity via the interconnected grids to Europe.

* Sea Water Desalination with a Solar Lake: Ormat Turbines Ltd., of Yavne, Israel, has developed the salinity- gradient Solar Pond, proven at the 250,000 m2 solar pond power plant, at Beit-Haarava, north of the Dead Sea, Israel. Ormat now markets worldwide its low-temp geothermal power plants, based on the experience gained in Beit-Haarava.

IDE Technologies Ltd,. of Raanana, Israel, has developed its low- temperature Multi Stage Distillation (MSD) Desalination process, proven by its 10,000 m3 per day of fresh water from Mediterranean Sea water, the facility located at the Israel Electric Corp. Eshkol power station, Ashdod, Israel. IDE has for some years been marketing worldwide multiple large MSD units, powered by low-temperature heat, coupled with a variety of conventional power plants. The two technologies have been integrated, tests and proven technologically viable.

The town of Eilat, Israel, today has 60% of its fresh water requirements provided by desalinated water from brackish water, produced by Reverse Osmosis facilities. The Jordanian town of Aqaba, situated just a few kilometers from Eilat, will most probably also need additional fresh water supply.

Ormat LTD., in cooperation with IDE, proposes to undertake a sea water desalination project with a Solar Lake in Eilat.

Similar projects can, of course, be promoted in the Middle East and in other arid areas in the world.

* Solar Tower for Industrial Applications: At the 3MWT Solar Tower Faculty at he Weizmann Institute of Science

(WIS) in Rehovot, Israel, advanced technologies are being developed for high-temp. heat, electricity generation, gasification of Biomass, storage and transport of energy, solar powered laser, etc. The first application which already was proven viable is steam production for industrial use.

It is proposed that a Solar Tower Facility and its Heliostats Field will be constructed at the Dead Sea Works (DSW) plant, at Sodom, Dead Sea, Israel, for steam production, as a first phase. The other WIS relevant technologies, now under development and testing, will be employed at the same site, when they become mature for scale-up, conforming with the various large industries. When approved a relevant company will be established to undertake the project, in cooperation with DSW.

It should be noted that, just a few kilometers away, across the border, the Jordanian Potash Works is using the same Dead Sea resource for production.

COOPERATION IN PROJECTS RELATED TO THE EARTH SCIENCES

The similarities in the earth’s content and characteristics are quite high in the case of neighboring countries, and Cooperation between such countries can be very fruitful. Some of these ideas have been suggested for possible cooperation in our region:

1. Mitigation of Seismic Hazards: Regional cooperation is essential for the safety and benefit of all nations in the Middle East and around the Mediterranean which has a long history of destruction due to earthquakes. An earthquake in Algeria recently caused mass destruction, and it as not so long ago that in Morocco much suffering was caused by an earthquake. The USGS has taken preliminary steps to organize such cooperation for the Middle East but this must be broadened for all the Mediterranean countries to minimize casualties and damage by ensuring relevant building codes. This could be achieved by a thorough seismic study of the area and the construction of seismic nets. An advanced earthquake monitoring system has accumulated data which could be of great importance to development planning of other states situated near the Syrian-African Rift for the prediction of major earthquakes. A common seismic data base is proposed and a common alert system will be valuable to all countries in the region.

2. Oceanography: It is in all our interests to protect our sea as environmentally friendly, considering that it has many applications – fishing. tourism, etc. The Mediterranean is environmentally very sensitive as it has only two outlets – Gibraltar and Suez. To manage it properly, a thorough study and monitoring of its biological, chemical and physical parameters should be conducted as a regional cooperation project. Some efforts were made by Ciesem, the UN and Poem for the Eastern Mediterranean, but a regional approach will be far more beneficial. Researches on the important problems of the Gulf of Eilat/Aqaba are conducted separately in the centers for oceanographic research – one situated in Eilat and the other situated in Aqaba. The utility of cooperation is clear, and can be foreseen in the research of sources and impacts of pollution on the gulf, in the development of detection and warning systems, and in development of strategies for prevention, containment and cleanup of pollution in the Gulf area.

3. Mariculture: The Mediterranean fish yield is poor and getting worse all the time. The population is growing, fresh water is scarce and food is needed. Israel, internationally recognised for its R&D in the field of mariculture, could contribute to solving this problem. Constructing breeding ponds and cages along the coast with such know-how will be to the benefit of all the peoples of the region. Even the problem of pollution caused by such breeding has been solved in the integrated ponds where biological filters clean the water.

4. Coastal Management: The Mediterranean, Arabian Sea, the Gulf and Red Sea coasts are a unique treasure and have many uses. Thus, the optimum planning based on a thorough study of the seas is vital. The interdependence of the coastlines area make such a study more important. This could well be a practical extension of the 1975 Mediterranean Pact which could also influence the seismic concepts.

5. Water Reservoir Management: Fresh water is one of the major problems of the area. Therefore the management of water reservoirs and ground-water resources is crucial. Mutual cross-fertilization of ideas is the best way to ensure proper use.

6. Oil and Gas Exploration: Joint Jordanian-Israeli teams of experts might compare data on underground structures in the two countries and carry out regional geophysical surveys

(seismic, gravimetric, etc.) as a first phase in search of oil, gas and minerals. The integration of data based geological information and advanced methodologies and exploration techniques would be beneficial to both countries in their search for oil and gas. Israel has accumulated much experience in the application of stratigraphic, tectonic and seismic methods.

7. Geothermal Water: Geothermal water resources in the Arava region can be utilized for heating protected agricultural crops on both sides of the Israel-Jordan border.