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AAPI Newsletter: July 2023

July 31, 2023

By Abraham Accords Peace Institute

A great step forward on the road to continued progress in supporting and sustaining the Abraham Accords took place in July 2023, with Israeli recognition of Moroccan sovereignty over Western Sahara. AAPI President and Executive Director Rob Greenway applauded the recognition, saying “I congratulate HM King Mohammed VI and Israeli Prime Minister Netanyahu on this historic development, which we believe will significantly advance bilateral ties. As we have communicated on numerous occasions with Israeli and Moroccan leaders, recognition of Moroccan sovereignty is not only the right thing to do, but it is also of a strategic imperative that will contribute greatly to advancing Morocco-Israel relations. We are also thrilled at the possibility of Israel opening a consulate in Dakhla, a move that will cement the bonds between the two nations, and which would follow similar decisions by more than 30 other countries convinced by the moral, historic, and strategic imperative of Morocco’s sovereignty over its Sahara.”

This widely celebrated move will pave the way for increased support and cooperation amongst Abraham Accords members.

 


The Abraham Accords and the EastMed Natural Gas Market: Supporting the Region’s Ambitions to Become a Global
Gas Player
This month, we highlight an excerpt of a paper written by energy experts Gina Cohen and Alexander Kislov, with the support of AAPI, analyzing the potential of Abraham Accords and EastMed cooperation to help solve global energy challenges. (Full Report here)
 

The changes in the global energy market, which are causing nothing less than an economic and political upheaval that will lead to enduring global shifts, all culminate in the need for Europe especially, to re-appraise its security of energy policies. This, combined with Israel’s growth as a natural gas player, and the signing of the Abraham Accords, is an opportunity for Israel and its new partners in the Arab world, together with Egypt and Jordan, to play a significant role in helping further stabilize the region, while contributing positively to the global economic scene.
 
This paper examines the disconnect between global and European energy demand and long-term supply, and will provide an overview of the Israeli gas sector, as well as relevant aspects of the greater Eastern Mediterranean region, including Egypt, Jordan, Cyprus, Turkey and Lebanon.

The analysis will conclude with executable recommendations on how to help contribute to marrying the surplus gas available in Israel (and other regional markets) with global energy needs, via new developments and gas export projects.

Gas Reserves Sector Overview: Greater Eastern Mediterranean Region
 
Egypt

  • Egypt has large reserves of gas, producing 67 bcm in 2022, but as a country with a population of 110 million, it consumed nearly all gas produced locally (61 bcm in 2022).
  • Egypt imported 6.3 bcm from Israel. The delta between Egyptian gas production combined with imports from Israel, and local gas consumption, was exported as LNG as well as small pipeline volumes to Jordan, leading to total exports of around 10 bcm in 2022.

Jordan

  • Jordan has no gas reserves to speak of and is a net importer from Israel and Egypt. The country’s annual gas consumption stands at around 3.5 bcm per year.

Cyprus

  • Cyprus has proven recoverable gas reserves of about 400 bcm, which can be developed separately or combined with Israeli gas export quotas to be channeled to international markets.
  • None of the fields have been developed and Cyprus to date consumes no gas.

Turkey

  • In 2022, the country consumed 53.2 bcm. Its first significant gas discovery (Sakarya) came on-stream in 2023, but the country is still highly dependent on imports from Russian, Iran and Azerbaijan, as well as LNG.

Lebanon

  • Lebanon has not made any gas discoveries and is not consuming any gas.

 
Israel (as of mid-2023)

  • Total: Over 1,000 billion cubic meters (bcm)
  1. Including Tamar and Tamar South West (285 bcm)
  2. Leviathan (619 bcm)
  3. Karish and Tanin (99 bcm)
  4. Small fields including Katlan (~50 bcm).
  • Israel Gas Market Fundamentals in 2022: Total Gas Production: Over 21.9 bcm (12.7 bcm was consumed in Israel; 9.2 bcm exported (6.3 bcm to Egypt, 2.9 bcm to Jordan).


In the past 5 years, gas production in Israel doubled, which allowed satisfying growing domestic consumption while significantly increasing exports to Egypt and Jordan.

Executable Recommendations for Key Stakeholders
 
Current and potential new member-states of the Abraham Accords should consider further investments in the natural gas infrastructure in the EastMed region, including the upstream, expansion of the pipeline grid within the region (e.g., new routes of gas supply from Israel to neighboring countries), and export projects, including (F)LNG plants. The proximity of the EastMed gas sources to one of the world’s key gas importing markets – Europe – could support high returns and profitability for such investments. 
 
The Government of Israel must reach a clear decision that Israel is becoming a gas exporter and accordingly adopt suitable policies, while refraining from regulatory decisions that contradict the accepted conditions in international gas contracts.
 
It must play an active role in removing barriers and must not leave the full burden and risks on the gas companies. It must also move ahead with providing the permitting needed, and the siting and regulatory frameworks for an FLNG facility.
 
Egypt should create a more transparent energy market environment (including on pricing) and clearly define the regulatory framework for LNG exports. One of the solutions might be to finally review the prices for electricity in compliance with the country’s program to gradually phase out electricity subsidies. This would increase the electricity usage efficiency and limit the spikes of demand for power in summer, easing the pressure on the natural gas market.
 
Secondly, the Egyptian government should consider providing long-term guarantees to new potential suppliers (including Israeli companies and Cyprus fields’ developers), committing to not diverting gas volumes earmarked for export to the domestic Egyptian market, and securing agreed volumes for the LNG exports. This would solve the problem of the ullage in the Egyptian LNG plants, provide the country with stable export revenue from LNG exports, and create a transparent market environment for new suppliers.
 
Insofar as the UAE is concerned, all countries in the region could benefit from its gas experience and from it being a rare country that both imports and exports LNG. Although the UAE has never been short of gas potential, yet it remains a substantial net importer.
 
As the UAE is looking to change its status by the second half of this decade with its intention of establishing a second LNG export facility (ADNOC’s project), Israel, Cyprus and Egypt, can all gain greater understanding on how such developments are accomplished. In addition, the UAE is connected to Qatar via a gas pipeline and imports 20 bcm of gas from Qatar, thus bringing in another potential player into the greater region.
 
It is vital that the USA and EU work with the countries of the Eastern Mediterranean and Abraham Accords to advance strategic solutions, such as those proposed here. Together, Europe and the countries of the region can advance energy independence from Russia, while building a more stable and sustainable future for the Eastern Mediterranean and the Middle East.
 
Despite Europe’s long-term plan to wean itself off fossil fuels, it still requires gas, creating a window of opportunity for Israeli (and Cypriot and Egyptian) gas supplies over the next 20-25 years. Rebuilding Europe’s gas supply mix is expected to take several years and will require large investments in new pipelines and LNG receiving terminals, and long-term contracts to enable the development of new export assets. Volumes from the key EastMed natural gas players, and potentially in the future, from additional regional players such as northern Iraq, Lebanon and Morocco, could play a substantial role in filling the gap left by Russian gas.
 
The Abraham Accords have provided a unique political stability framework for a number of success stories in terms of those conditions. Since the signing of the Accords in 2020, Israel and Egypt have significantly expanded natural gas trade volumes, UAE’s companies have greatly increased their presence in the Israeli gas sector, and even Jordan is currently receiving larger volumes of gas from Israel than anticipated. Leading Israeli oil and gas players have stepped into exploration activities offshore Morocco.
 
The future of EastMed natural gas exports, and the region’s contribution to the mitigation of the European and global natural gas crisis, will greatly depend on the possibility of further development of similar “success stories”.
 
Read Full Report and Analysis
 

June 2023 Visitor Numbers: (Source: Israel Central Bureau of Statistics)

  • 200 Moroccan citizens visited Israel in June 2023, constituting no change from June 2022. 2,000 Moroccan citizens have visited Israel so far this year, a 66.67% increase from the first six months of 2022.
  • 100 Egyptian citizens visited Israel in June 2023, constituting no change from June 2022. 4,900 Egyptian citizens have visited Israel so far this year, an 16.67% increase from the first six months of 2022.
  • 2,500 Jordanian citizens visited Israel in June 2023, constituting an 13.64% increase from June 2022. 8,700 Jordanian citizens have visited Israel so far this year, an 47.46% increase from the first six months of 2022.
 
AAPI at the N7 Conference 
Manama, Bahrain

Left-side image: AAPI Israel Director Asher Fredman met in Bahrain with H.E. Nancy Dinah Elly Khedouri, Member of the Shura Council of the Kingdom of Bahrain, and received a copy of her book on the history of Bahrain’s Jewish community.

Right-side image: AAPI Israel Director Asher Fredman presented this month AAPI’s research and proposals at the N7 Initiative Conference on trade in Manama, Bahrain. During the conference, he had the opportunity to discuss advancing Abraham Accords ties with leading economic figures from Accords’ governments across the region, including H.E. Dr. Shaikh Abdulla bin Ahmed Al Khalifa, Undersecretary for Political Affairs at Bahrain’s Ministry of Foreign Affairs, and H.E. Eman Ahmed Al Doseri, Undersecretary at Bahrain’s Ministry of Industry and Commerce. The conference was sponsored by the Atlantic Council, Jeffrey M. Talpins Foundation, and Bahrain Ministry of Foreign Affairs.
 
 

June 2023 Trade Numbers: (Source: Israel Central Bureau of Statistics)

  • Trade between Israel and the United Arab Emirates reached $259.9 million in June 2023, constituting a 14.25% decrease in trade from June 2022. For the first six months of 2023, bilateral trade was $1.55 billion, constituting a 27.52% increase in trade from the first six months of 2022.
  • Trade between Israel and Bahrain reached $2 million in June 2023, constituting a 150% increase in trade from June 2022. For the first six months of 2023, bilateral trade was $7.2 million, constituting a 44% increase in trade from the first six months of 2022.
  • Trade between Israel and Morocco reached $6 million in June 2023, constituting a 62.16% increase in trade from June 2022. For the first six months of 2023, bilateral trade was $38.5 million, constituting a 96.43% increase in trade from the first six months of 2022.
  • Trade between Israel and Egypt reached $27.1 million in June 2023, constituting a 3.83% increase in trade from June 2022. For the first six months of 2023, bilateral trade was $161.2 million, constituting a 3.93% increase in trade from the first six months of 2022.
  • Trade between Israel and Jordan reached $40.5 million in June 2023, constituting a 7.74% decrease in trade from June 2022. For the first six months of 2023, bilateral trade was $256 million, constituting a 4.83% decrease in trade from the first six months of 2022.
 
  • Over 163,000 Israelis visited Dubai in the first four months of 2023, a 90% year-over-year increase. Israel has become the third-fastest growing source tourism market for Dubai (among major markets), and it is now its eighth-largest source tourism market overall.
  • Over 35,000 Israelis visited Abu Dhabi in the first four months of 2023, an 84% year-over-year increase. Israel has emerged as the ninth-largest source market for tourism to Abu Dhabi.
  • Tourism to Israel from Abraham Accords member countries continues to increase and is expected to hit 39.8 thousand by the end of 2023.
 

June 2023 Flight Departure Numbers: (Source: Israel Airport Authority)

  • 74,224 Israelis flew to the United Arab Emirates in June 2023, constituting a 40.56% increase from June 2022.
  • 14,751 Israelis flew to Morocco in June 2023, constituting a 0.78% decrease from June 2022.
  • 10,901 Israelis flew to Jordan in June 2023, constituting a 78.44% increase from June 2022.
  • 20,106 Israelis flew to Egypt in June 2023, constituting a 14.44% increase from June 2022.
  • 2,414 Israelis flew to Bahrain in June 2023, constituting a 17.98% increase from June 2022.
 
Notable Developments in July 2023:
Below you can find a timeline of notable Abraham Accords-related events that occurred in the month of July 2023:
 
July 2: Israeli President Isaac Herzog announced that Andre Azoulay, a Moroccan Jewish senior adviser to HM King Mohammed VI of Morocco, will be receiving the Presidential Medal of Honor.
 
July 3: The Israeli Foreign Ministry announced plans to bring more than 1,000 people and over 100 climate technology-related companies to the COP 28 Summit in Dubai at the end of November.
 
July 5: Israel and the UAE signed an agreement to boost business and manufacturing ties between institutions in industry, trade, and investment
 
July 7: An end-of-the-season, professional bike race was announced that will include stages in Israel, the UAE, and Bahrain. The first-of-its-kind race will be the finale of the season, and it is expected to draw participation from the sport’s biggest names.
 
July 8: An Israeli team flew to Saudi Arabia to take part in the finals of the FIFAe World Cup, a video game contest which took place in Riyadh for the first time. The team of three traveled to Saudi Arabia on Israeli passports, and the Israeli flag was displayed at the event’s opening ceremony.
 
July 9: The JCC Maccabi Games, the largest Jewish youth sporting event in the world, commenced in Haifa, Israel. The event included a first-ever delegation of seven teenagers from Morocco.
 
July 10-11: The N7 Initiative hosted the “N7 Conference on Trade” in Manama, Bahrain, bringing together high-level trade representatives from Bahrain, the United Arab Emirates, Israel, Morocco, Egypt, Sudan, and the United States. AAPI Director for Israel Asher Fredman presented at the conference, providing recommendations on how to increase trade between Israel and Abraham Accords countries.
 
July 17: The Israeli Defense Forces announced the appointment of Col. Sharon Itach as Israel’s first-ever military attaché to Morocco.
 
July 17: Israeli Prime Minister Benjamin Netanyahu sent a letter to Moroccan King Mohammed VI officially recognizing Moroccan sovereignty over Western Sahara. The historic move will be “reflected in all relevant acts and documents of the Israeli Government” and “transmitted to the United Nations, to regional and international organizations of which Israel is a member, and to all countries with which Israel maintains diplomatic relations.” As part of the recognition, Israel is also considering opening a consulate in Dakhla.
 
July 17: Following the announcement of Israeli recognition of Moroccan sovereignty over Western Sahara, Morocco shared that it is “in the process” of raising the diplomatic status of its mission in Tel Aviv to an embassy.
 
July 19: The King of Morocco, HM Mohammed VI, wrote a letter to Israeli Prime Minister Benjamin Netanyahu thanking him for the Israeli recognition of Moroccan Sovereignty over the Sahara and invited him for a visit to Morocco.
 
July 26: The Directors of the Israeli and Moroccan National Archives, Ruth Abramowitz and Djemma Beida, signed an MOU to increase cooperation between the two countries’ archives.
 
July 28: The Moroccan National Tourist Office and the Israeli airline Arkia signed an agreement to launch flights between Tel Aviv and the Moroccan coastal city of Essaouira.

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