A worker stands on an oil rig in Karkur, northern Israel October 17, 2010 reuters
Israel can look forward to long-term energy security after the discovery of a huge off-shore natural gas field but obstacles lie ahead in exporting its output, experts said on Thursday.
Israel will find it hard to secure foreign buyers as European gas consumption is weakening while competition is stiff in the expanding Asian market, they said.
Texas-based Noble Energy and its Israeli exploration partners described on Wednesday the Leviathan prospect -- 130 km (80 miles) off the Mediterranean port of Haifa -- as the world's biggest gas find in the past decade
Leviathan is estimated to have 16 trillion cubic feet (450 billion cubic metres) of gas. Tamar, a nearby site being drilled by Noble and Israel's Delek Energy, was the largest gas find in the world in 2009, at 8.4 trillion cubic feet.
"A world power", read a headline in Israel's mass circulation Maariv newspaper, describing its new energy muscle.
But the experts pointed to a world glut in natural gas, and noted that, unlike oil which is sold on global markets, gas is geographic and needs a specific buyer.
"It's not a great time for Israel to enter a lot of the markets," said Brenda Shaffer, an energy expert at the University of Haifa. "European consumption is going down, new suppliers are coming on. I'm not sure there's a buyer waiting by the door at this point."
Shaffer noted larger amounts have been discovered onshore, where it is also cheaper to produce than in deep water.
Even if the hurdles to export prove insurmountable, the gas at Leviathan will give Israel, which has always been dependent on imports, long-term energy security.
Amir Kahanovich, macroeconomist at brokerage Clal Finance, estimated the gas at the site could be worth $95 billion. "A country that supplies itself with a large part of its energy is more economically stable (and) less sensitive to swings in energy prices," he said.
Production from Tamar is slated to begin in 2013 and it is being targeted for local consumption. Leviathan, its developers said, won't be ready until 2017.
The Leviathan find raises the chances of other major discoveries in the region -- off the shores of Cyprus, Lebanon, Egypt and the Palestinian territories.
The Israeli partners have talked of exporting through a pipeline or as liquefied natural gas. Shaffer said the chances of the gas being sold to Europe were small and probably the most viable option would be using existing LNG facilities in Egypt.
"Asian markets are growing in LNG imports but Israel would have to compete with Qatar, Russia and Australia, which are already producing LNG," she said.
Israel, Shaffer said, needs to develop technologies to expand the use of natural gas beyond generating electricity and into transportation and chemicals, as happened with oil, which was initially used to make kerosene for lighting.
"I've worked in countries that depend on natural resources and dreamed of developing a high-tech based economy," she said. "Israel has this high-tech based economy and wants to become a resources exporter."