Institute for Contemporary Affairs
Founded jointly with the Wechsler Family Foundation
There has been a dramatic development in energy diplomacy in the Middle East as opposing powers compete for offshore energy resources in the Eastern Mediterranean basin.
In the midst of this collision of energy interests, in July 2020, the U.S. energy giant Chevron announced that it was acquiring the shares of Noble Energy in Israeli gas in the Eastern Mediterranean.
Chevron had been a component of the Standard Oil Company. It was forced by the U.S. government back in 1911 to adhere to American anti-trust laws and split apart.
In recent years, the Chevron component merged with Gulf Oil and later with Texaco, forming the second largest corporate entity in the U.S. In 2020, the Middle East has changed, and Chevron entered the Israeli market, breaking with its sister companies.
Chevron’s entry into the Israeli gas market is a revolutionary development. It has major geostrategic implications. Until now, the largest of the multinational oil companies refrained from investing in Israeli oil and gas.
They even stayed out of the Israeli oil shale market. Only small firms like Noble Energy were prepared to come here. This was particularly true of the “Seven Sisters” – oil firms that operated in Iraq and throughout the Arabian Peninsula.
Historically, none of the American oil companies that held shares in the Arabian-American Oil Company (Aramco) would do business with Israel. That included Standard Oil of New Jersey (Exxon), Standard Oil of New York (Mobil), Texaco, and Standard Oil of California (Chevron). The same self-imposed restrictions applied to the Trans-Arabian Pipeline (Tapline), which included the same partners that formed Aramco.
Here is another important point of historical context: as U.S. oil companies, led by Aramco, came into the Persian Gulf after the Second World War, they prepared the groundwork for a massive increase in an American military presence there.
U.S. naval vessels regularly entered the Persian Gulf; the U.S. completed construction of the great Dhahran air base in eastern Saudi Arabia. U.S. oil executives and State Department representatives held regular consultations to map out U.S. strategy in the region.
Over the past seven decades, two principal factors have driven U.S. involvement in the Middle East.
First, rising security threats in the region began at the dawn of the Cold War and the issuance of the Truman Doctrine in 1947. Second, the steady expansion of American energy interests directly impacted the growth of U.S. involvement in the region.
Today there is a growing concern regarding America’s possible pullback from the Middle East, including its naval presence in the Eastern Mediterranean.
There has been a reduction in the deployment of the U.S. Navy’s carrier battle groups. In fact, over the last five to ten years, U.S. officials have spoken of the rising importance of Asia, especially the South China Sea, and the declining importance of the Middle East.
This prospective American pivot away from the Middle East highlights the significance of Chevron’s new embrace of energy opportunities in the Eastern Mediterranean.
Chevron’s recent move represents a potential turning point in U.S. energy diplomacy in the region. Perhaps most critically, Chevron’s engagement paves the way to an invigorated U.S.-Israel alliance in the fields of energy and security in the years ahead.
