AS ISRAEL BECOMES MAJOR GAS EXPORTER, SECURITY ISSUES IMPOSE BURDENS ON IDF

Israel Faces Gas Export Challenge: Yakir Gillis, Forbes, Sept. 28, 2016— Israel has been looking to develop its huge offshore gas resources after a period of regulatory uncertainty, but the challenges surrounding the construction and security of export pipelines may put off all but the most forward-looking investors.

Israel Inks Historic Gas Deal with Jordan at Perilous Time: Ari Lieberman, Frontpage, Sept. 28, 2016 — Israel this week signed a historic agreement with Jordan to supply the energy-starved kingdom with natural gas from its Leviathan gas field.

IDF Battles to Keep its Finest From Defecting to Private Sector: Shoshanna Solomon, Times of Israel, Oct. 27, 2016 — The Israeli army is fighting a battle it knows it can only partially win: to preserve the best of its talent within its ranks, even as the likes of Google, Apple and Facebook entice them with salaries as much as five times what the army can offer.

Spies in Space: The Story of Israel's Ofek Satellite Program: Barbara Opall-Rome, Jerusalem Post, Sept. 25, 2016— If you’re looking for a story that captures Israeli innovation, cunning and can-do chutzpa, think spy satellites. Look to Ofek, the Hebrew word for horizon.

 

On Topic Links

 

World’s Largest Desalination Plant Turns Mediterranean into Drinking Water (Video): Breaking Israel News, Oct. 26, 2016

Israel Should Avoid Turkey, Include Cyprus in Gas Export Projects: Ariel Ben Solomon, BESA, Oct. 7, 2016

Israel's Plan to Supply the Arab World With Energy Is Under Threat in Jordan: Natanel Abramov, Newsweek, Oct. 11, 2016

Israel-China Ties Bloom with Free Trade Talks Imminent: Iacopo Luzi, Times of Israel, Sept. 29, 2016

 

 

 

ISRAEL FACES GAS EXPORT CHALLENGE

Yakir Gillis                                                          

Forbes, Sept. 28, 2016        

 

Israel has been looking to develop its huge offshore gas resources after a period of regulatory uncertainty, but the challenges surrounding the construction and security of export pipelines may put off all but the most forward-looking investors. Israel has one of the biggest gas reserves in the eastern Mediterranean basin, the Leviathan field, which could in time turn it into a major regional energy player. However, getting the gas out of the ground has been dogged with problems. Chief among them was an antitrust ruling stemming from concerns that the two main exploration companies, Texas-based Noble Energy and Israel’s Delek, stood to monopolise the country’s natural resource sector.

 

The subject was addressed in protracted production agreement negotiations between the government and the investors. The process was held up by persistent claims that the latter were being offered too generous a deal. Eventually approved by the Supreme Court in May, the so-called “Gas Framework” offers exploration companies a friendly regulatory and tax environment, exempting them from royalties until they achieve a 150% return on their investment.

 

Early this month, the Israeli Ministry of National Infrastructure, Energy and Water Resources held an event in London aimed at encouraging international oil and gas companies to submit bids for several new exploration blocks off Israel’s coast. The Minister, Yuval Steinitz, alongside the ministry’s Director General and its Chief Scientist, gave a presentation underlining both the high likelihood of a major natural gas discovery and the attractive production terms offered by the government. It was the second leg of a roadshow that has also taken in Houston and Singapore. But while there is no doubting the commercial potential of the 24 blocks up for auction, Israeli officials may find them a tough sell.

 

One of the main reasons is the slump in the price of natural gas, which many believe will be long term because of excess supply. There is intense competition between exporters over a limited number of major consumer markets. Since sale to Israeli consumers alone would not be sufficient to offset the costs of production, the commercial success of companies exploring Israel’s offshore reserves will rely on their ability to export to other countries in the Middle East and beyond.

 

This would require close cooperation between four major actors— Israel, Turkey, Egypt and Cyprus— to create a regional export network. The centrepiece of a plan being discussed in diplomatic and business circles throughout the region is an underwater pipeline running from Israel through Cyprus to Turkey. Turkey is one of the fastest growing energy markets in the world and, more importantly, a gateway to Europe, which has been heavily reliant on gas from Russia. An existing pipeline would connect Israeli offshore sites to Egypt, which is developing substantial LNG infrastructure, and could offer a shipping gateway for LNG exports. This pipeline runs through the volatile Sinai Peninsula and previously transported gas from Egypt to Israel. At that time, its reliability was questioned because of repeated sabotage by terrorists.

 

The diplomatic challenges involved in getting these countries to cooperate on a gas export project of this scale are formidable. Turkey has only just restored diplomatic relations with Israel after years of heightened tension, and still does not officially recognise the Cypriot government. Relations between Turkey and Egypt have also been strained ever since the July 2013 coup, which ousted former Muslim Brotherhood President Mohammed Morsi, who was supported by Ankara. While Egypt and Israel have been on relatively good terms under President Abdel Fattah el-Sisi’s administration, open cooperation with Israel would leave him facing accusations of ‘selling out’ the Palestinians. All of which undermines the business rationale for launching a major exploration operation in the eastern Mediterranean basin.

 

But while geopolitical conditions might be difficult, they have never been more favourable than now. The Israeli government is keen to promote regional stability, particularly to make the point that it can be achieved without major concessions to the Palestinians. Turkey’s adoption of a more pragmatic foreign policy and a desire to diversify its energy resources could see it building bridges with regional foes, which was certainly a factor in its rapprochement with Israel. As part of the reconciliation agreement between the two countries in June, Turkey committed to entering negotiations with Israel over the purchase of Israeli gas. The US, meanwhile, would be keen on cooperation between its Middle East allies on pipeline projects, and to see Turkey and Europe shift away from buying Russian gas. Indeed, many observers regard gas exploitation in the eastern Mediterranean as a possible driver of stability and cooperation in the region.

 

It is hard to predict whether many potential investors will look beyond the present geopolitical obstacles to the proposed pipeline projects, which is why the Israeli government is offering such a favourable regulatory and taxation framework. That should prove to be attractive, but only to those with a significant risk appetite. For exploration companies who believe that countries in the region could in time pull together to export gas to the Middle East and beyond, it might be a gamble worth taking.          

 

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ISRAEL INKS HISTORIC GAS DEAL WITH JORDAN AT PERILOUS TIME                                                        

Ari Lieberman                                                                                                      

Frontpage, Sept. 28, 2016

 

Israel this week signed a historic agreement with Jordan to supply the energy-starved kingdom with natural gas from its Leviathan gas field. The deal is worth a reported $10 billion and has instantly transformed the Jewish state into an energy exporter. In addition to the obvious pecuniary benefits to the Israeli economy, the agreement promotes regional stability by creating an energy and economic interdependence.

 

Israel is now looking to sign energy deals with two other regional players of import, Greece and Cyprus. Israel’s energy minister plans on traveling to Athens on Wednesday to cement agreements. The Israeli plan centers on laying a network of pipes so that natural gas can be shipped to these nations as well as other European countries. Currently, much of Europe relies on Russian gas and an alternative source would be welcome. Even Turkey, which recently exchanged ambassadors with Israel after a long hiatus, has expressed interest in cooperating with Israel in the energy sector.

 

Israel currently operates and lays claim to four gas fields off its coast. Two small ones are located off the shores of Ashkelon while the two larger ones – called Tamar and Leviathan – are located in the north, approximately 90 miles west of Haifa. Leviathan should be fully operational within a few years while the other fields are already supplying Israel with natural gas. Israel derives approximately 60 percent of its electricity needs through natural gas. Energy officials estimate that since the gas began flowing just over a decade ago, Israel has saved approximately 35.5 billion shekels which translates to $9.6 billion.

 

The welcome news however, comes with cost. Lebanon, which is controlled by Hezbollah, which in turn receives its marching orders from Iran, has laid claim to Israel’s energy finds. Lebanon’s maritime and territorial claims are wholly without merit and it is a virtual certainty that they were made at the behest of either Hezbollah or Iran or both. While Lebanon’s navy is negligible and poses no threat to Israel and its off-shore gas platforms, Hezbollah does pose a more significant threat. Hezbollah possesses a number of Chinese C-802 radar guided anti-ship missiles. A missile of this type damaged an Israeli corvette, the INS Hanit, during the 2006 Lebanon War (the ship was repaired and returned to service 3 weeks later) and sunk a civilian Egyptian ship cruising some 37 miles from shore.

 

The C-802 can be defeated through electronic counter measures (ECM) and point defense systems like the Barak-8 anti-missile, anti-aircraft system and the Phalanx. In the case of the Hanit, its captain had turned off the ship’s ECM systems because he did not believe that Hezbollah had such missiles. Of greater concern is the Russian Yakhont missile which is considered more accurate and less susceptible to ECM than the C-802. Israel considers these missiles game-changers because they significantly enhance Hezbollah’s anti-ship capabilities. They also quite naturally pose a threat to Israel’s offshore gas platforms and related infrastructure. In the past few years, Israel has launched several successful attacks on Syria aimed at interdicting the flow of sophisticated weapons to Hezbollah but it is believed that notwithstanding these efforts, Hezbollah has taken possession of a limited number of Yakhont missiles.

 

In addition to the missile threat, Israel must also prepare for other contingencies such as suicide speed boats and remotely piloted drones packed with explosives. Israel can also not discount the possibility that Hezbollah may attempt to seize an offshore platform with shock troops. While Hezbollah is fully engaged in Syria and the threat level remains relatively low for the moment, Israel is not resting on its laurels. It is significantly enhancing the Navy’s tactical and strategic capabilities.

 

The Israeli Navy had once been considered the orphan child of the armed forces. Priority went to the ground and air forces with the Navy getting the leftover hand-me-downs. That perception changed during the Yom Kippur War of 1973 when the Navy was the only branch of the armed forces not taken by surprise during the initial Arab onslaught. Its fleet of Israeli and French designed missile boats decimated the entire Syrian navy and severely mauled the Egyptian navy while keeping the shipping lanes free for maritime traffic. The Navy’s role in securing Israel’s defense has come to prominence ever since.

 

In the next war with Hezbollah, the Navy will be tasked with neutralizing the Hezbollah menace and securing the eastern Mediterranean. Israel’s naval capabilities are indeed formidable. Its large fleet of Sa’ar 4.5 missile boats and Sa’ar 5 corvettes pack powerful punches and are equipped with Harpoon and Gabriel anti-ship missiles, torpedoes, an array of cannon, point defense missile systems and state-of-the-art ECM. The Sa’ar 5 is also equipped with a helipad and hangar to accommodate the Atalef helicopter. Complementing the corvettes and missile boats are some 45 patrol and fast attack craft, some of which are equipped with missiles and the highly regarded Typhoon stabilized cannon system. Rounding out the surface fleet will be a pair of F124 Sachsen-class frigates from Germany and the Sa’ar 72, an 800 ton vessel currently under construction by Israel Shipyards.

 

The Navy has also taken possession of its fifth submarine, the INS Rahav. The craft can deliver Israeli designed nuclear tipped missiles called the Popeye Turbo and can remain submerged for significantly longer periods than conventional submarines. It will be tasked with carrying out covert operations and remains a powerful deterrent against those who seek to harm Israel.  Israel’s naval commandos are continuously training for scenarios in which they’re called upon to retake gas rigs seized by terrorists. The complex operation would be made more difficult by the fact that the terrorists could conceivably seize hostages and a firefight on the rig could set off an explosion or fire due to the presence of highly flammable materials.

 

The challenges involved in protecting Israel’s gas rigs and related infrastructure are daunting but it appears that Israel is more than ready for the task and the Navy will serve as the nation’s tip of the spear.                                                            

 

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IDF BATTLES TO KEEP ITS FINEST FROM

DEFECTING TO PRIVATE SECTOR                                                  

Shoshanna Solomon                                                                         

Times of Israel, Oct. 27, 2016

 

The Israeli army is fighting a battle it knows it can only partially win: to preserve the best of its talent within its ranks, even as the likes of Google, Apple and Facebook entice them with salaries as much as five times what the army can offer. With Israel’s startup scene flourishing and multinationals setting up research and development centers, a shortage of engineers is heating up the competition for skilled personnel, with companies offering fatter and fatter salaries to recruit talent.

 

A reliable pool of skills — and one that has been fueling the so called “startup nation,” has traditionally come from the army. The IDF recruits 18-year-old women and men for a compulsory two-to-three-year service imposed on most citizens and allocates them to combat or other units, including intelligence and tech units. After intensive training, these soldiers are put in highly sensitive, secret and responsible jobs, developing and using cutting edge technologies. After their service, many stay on to become career soldiers while others venture out into civilian life and are either snapped up by high-tech corporations or set up their own start-up.

 

“The army has a very real problem” because the salaries it offers cannot compete with those offered by the private sector, said Giora Eiland, a retired major general of the IDF and a former head of the Israeli National Security Council. A son of a friend, he related, who recently graduated from the elite 8200 technology intelligence unit received a number of offers to work for private companies for around NIS 30,000 a month (around $7,800), which was four times the salary the army was offering him to stay on. “If you love your job, salary won’t make much of a difference,” Eiland said. “But if the salary they offer is 100 percent higher or, as in this case, 300 percent higher, then for sure you will leave. There is no dilemma whatsoever.”

 

Demand for army graduates has been fueled by the surge in startups operating in Israel and multinationals that have set up R&D centers in the country — all of which are scouting for talent. The intensity of their need has been compounded by the shortage of skilled engineers the nation is facing. The number of active high tech companies operating in Israel has jumped from 3,781 in 2006 to 7,400 in mid-2016, according to figures compiled by Tel Aviv-based IVC Research Center, which tracks the industry. In addition, companies from Google to Apple, Deutsche Telecom to Bosch have all set up research and development centers in Israel, with 278 multinational companies operating a total of 327 R&D centers around the country today, compared with about 250 such centers three years ago, IVC data shows.

 

Meanwhile, Israel’s high-tech industry will suffer a shortfall of more than 10,000 engineers and programmers in the coming decade if the government doesn’t take immediate action to prepare students to enter these fields, the Ministry of Economy and Industry’s chief scientist Avi Hasson warned in a report in June. So there is more demand for these skilled workers than supply, leading to a salary rise of around 10 percent in the past five years with workers changing jobs on average every 20 months, according to data compiled by Workey, which has developed a job search engine for Israeli startups. Starting monthly salaries in high-tech for soldiers who have completed their army service are around NIS 20,000, Workey data shows.

 

Data released by the IDF shows that a career officer with the rank of lieutenant in a technological position can earn roughly NIS 5,800-9,100 per month, pre-tax, while a captain could earn roughly NIS 8,600-11,200 per month. Salaries are determined by several factors including training, educational background, location and risk level. IDF data also shows that in the years 2011-2015, the number of outstanding officers leaving the army rose from under 17 percent in 2011 to a peak of almost 27% in 2014 before dipping to just over 25% in 2015 . The army defines outstanding officers as those who served as officers for at least two years and rank in the top third of officers in their unit, following a peer evaluation over a period of two years or who have shown outstanding abilities.

 

So the army decided to fight back. Not with salaries, an area it knows it cannot compete in, but by emphasizing the contribution these soldiers make to the country, by giving them more interesting jobs and greater responsibility at a younger age, and by putting in place a set of perks, scholarships and bonuses that will make them feel more valued. “We saw a trend in which it was very difficult to maintain our soldiers in service and we checked the reasons why,” said Maj. Meirav Stoler, a spokesperson of the Human Resources Branch in the IDF. Those who stay in the army, she said, based on a survey the army conducted among 21- to 29-year-olds, stay not for the salary, but for the challenge their role offered and because the soldiers found it important to contribute to the state.

 

“We know that the army cannot compete on matching terms with the civilian world,” said Stoler. “But we do not work based on material considerations only. The army needs to provide its soldiers with much more than material things and salaries.” The army’s new plan — which it has been implementing in the past few months — is to make sure that the soldiers who choose to remain “feel they can do more, get more and be more influential,” Stoler said. “Our push to keep the best in the service allows us to give each of them more important and senior jobs, and we see that this is indeed helping people to stay.”…                                   

[To Read the Full Article Click the Following Link—Ed.]                       

 

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SPIES IN SPACE: THE STORY OF ISRAEL'S                                                                            

OFEK SATELLITE PROGRAM                                                                               

Barbara Opall-Rome                                                                                            

Jerusalem Post, Sept. 25, 2016

 

If you’re looking for a story that captures Israeli innovation, cunning and can-do chutzpa, think spy satellites. Look to Ofek, the Hebrew word for horizon. It’s all there in Israel’s military satellite program, the newest of which – Ofek 11 – is struggling to stabilize itself in space after its launch earlier last week.

 

Inserted successfully into orbit by the country’s homemade Shavit launcher, the newest and most advanced satellite is likely to soldier on in space, but with limited lifespan and ability to perform its high-resolution spy duties. White-knuckled technicians and program managers toiling around the clock at Israel Aerospace Industries’ (IAI) ground control station near Ben-Gurion Airport are still hoping for a favorable ending to the latest chapter still unfolding. But like the chapters that have gone before, Ofek 11 represents the highs and lows of a story driven by strategic need and enhanced by its share of diplomatic intrigue. Conceived in secret, it’s a story of battling the laws of physics; and struggling on a shoestring budget to build rockets strong enough to loft satellites small enough into retrograde orbit against Earth’s eastward spin.

 

It’s also a story of fortitude. How the euphoria of reaching space in 1988 was followed by bitter back-to-back failures that saw two satellites swallowed by the sea. And how the heroes of our story finagled their way back from the brink with the 1995 launch of Ofek-3, Israel’s first operational imaging satellite whose progeny continue to fuel the regional power status of the Jewish state. “Small countries can be great only if they dream big,” said former president Shimon Peres. “With Ofek, we penetrated space and skepticism.”

 

Interviewed before the stroke that befell the pioneer of Israel’s aerospace and defense industry, Peres said Israel’s small size makes it uniquely positioned as a “center of excellence” for advanced research and development. “Our advantage is creative, out-of-the-box thinkers who push the boundaries of what was deemed impossible.” But with all due respect to Israel’s senior statesman, this is where our tale takes a cautionary turn. Because the flip side of this story is one of untapped potential and failure to leverage billions of dollars invested in military space to assure commercial competitiveness on the global market.

 

The US Futron Corp. consistently ranks Israel eighth in an annual competitiveness survey based on myriad criteria, including government investment, national space policy, the ability to attract financing and annual sales. In its latest Space Competitive Index (SCI), we have dropped to number nine. “Israel continues to be a leader in space technology, but has limited commercial sales,” Futron reported in its first SCI survey from 2008. The same holds true today. “Although Israeli technology is high quality and generally cost-competitive, Israeli manufacturers have less global scale than their counterparts,” Futron senior analyst Jonathan Beland told the Jerusalem Post Magazine.

 

But let’s go back. Our story begins in the late 1970s. US President Jimmy Carter was proving relentless in prodding Israel and Egypt toward peace. In the run-up to Camp David, the era of Israeli Air Force reconnaissance flights over Sinai was about to end. Plan Treasure was a top-secret forum where US and Israeli officials hashed out compensation to come from the 1978 accord. Among Israel’s requests: access to imagery from US spy satellites. “The Americans didn’t even answer us; they ignored the request,” recalls David Ivry, a retired major general who commanded the Israel Air Force at the time. That’s when the indigenous Israeli satellite program started to gain traction. Ivry said. “We knew after the treaty was signed, we would be obliged not to violate Egyptian sovereignty by overflying their airspace as we used to do,” he added…

[To Read the Full Article Click the Following Link—Ed.]

 

 

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On Topic Links

 

 

Israel Should Avoid Turkey, Include Cyprus in Gas Export Projects: Ariel Ben Solomon, BESA, Oct. 7, 2016 —As Israel begins closing deals for its natural gas, it should avoid linking itself to any expensive long-term pipeline deal with Turkey at the expense of allies Cyprus, Greece, or even Egypt. Notwithstanding the recent easing of tensions between the two countries, Israel cannot trust Turkish President Recep Tayyip Erdoğan’s Islamist regime as a linchpin in its natural gas export strategy.

Israel's Plan to Supply the Arab World With Energy Is Under Threat in Jordan: Natanel Abramov, Newsweek, Oct. 11, 2016—Public protests and civil society campaigns have been gathering pace in Jordan in opposition to the $10 billion deal recently signed by the state-owned National Electric Power Company (NEPCO) and suppliers of Israeli gas, serving as a timely reminder of the limits of overt cooperation, economic or otherwise, between Israel and neighboring Arab states.

Israel-China Ties Bloom with Free Trade Talks Imminent: Iacopo Luzi, Times of Israel, Sept. 29, 2016—Israel and China relations are reaching new heights as investors and entrepreneurs throng conferences in China and Tel Aviv and the two countries gear up for talks on establishing a free trade zone.

India, the UN vote, the Temple Mount and Ayodhya: Souptik Mukherjee, Jerusalem Post, Oct. 25, 2016— Hindu-Jewish ties date back over 2,500 years. It is believed that Jews arrived in India after the destruction of the First Temple by the Babylonians in 587 BCE. Jewish waves of migration to India took place after the destruction of the Second Temple by the Romans in 70 CE.