It seems Turkey and Israel are patching up their recent spat with some arms deals. At one time, Turkey and Israel were close–so much so that when the recent earthquake hit, Israel was the first country to extend aid, something which was approvingly noted in Turkey's newspapers. However, since 2010, when the Israel Navy stopped an effort backed by a Turkish foundation to break the Gaza quarantine, relations between the two nations have been tense. (Relations were already somewhat troubled, but it was only after the incidence that ambassadors were withdrawn.)

Why do I bring this to attention, particularly to this site about markets? Natural gas, and possibly oil. For anyone investing in the energy arena, with the exception perhaps of electric power, the Eastern Mediterranean is–or should be–of interest. When Turkey and Israel were on the outs, Israel approached Cypress seeking a deal on who had rights to what part of the offshore natural gas fields and constructing a pipeline through Cypress to Europe.

Turkey wasn't pleased with this development, since it claimed the northern part of the fields for itself (Lebanon has also staked a claim, but no one seems to be paying much attention to it). Things got sufficiently tense last year that when an exploration rig left Israel for further explorations in these fields (in the hope of find oil and not just natural gas) last year, Turkey dispatched two ships from its navy to "patrol" the northern fields it had claimed. What the ships would have done had the rig gone into those northern fields is unclear.

At the same time, Turkey has played a key role in helping Iran work around the economic sanctions imposed by the West as a means of stopping Iran's effort to build a nuclear bomb. Hence, the surprise of Israeli weapons sales to Turkey (particularly given the concerns about the weapons going to potential terrorists), not to mention Turkish efforts to secure Israeli natural gas.

These natural gas fields are estimated to be large–not yet at the level of the Qatari ones, but the estimates have been increasing with each new exploration well drilled. Noble Energy has a big interest in these fields, and so does one of the majors (I think it may be Chevron, but I'm blocking on which one in specific).





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