A significant share of the East Mediterranean natural gas reserves are in Israeli territorial waters. Israel hopes to export 40 per cent of this gas. A preferred option would be to construct a forked pipeline from the gas field. One arm would deliver gas to Cyprus, where it would be liquefied for onward export by tanker. The other arm would feed into Turkey's proposed national grid.
However the pipeline to Turkey would have to pass through Greek Cypriot territorial waters. Cyprus has been divided politically since1964, and militarily since 1974, between Greece and Turkey, so Greece would veto the Turkish arm of the pipeline. In addition Turkey has not forgiven Israel for violently boarding a Turkish ship, the Mavi Marmara in the Gaza relief flotilla in 2010.
The scheme would clearly benefit both Israel, Greece (in severe economic difficulties) and Turkey (with no fuel reserves), but cannot go ahead unless all three can agree to set aside their political objections. Thus Israel is in a position to contribute to a peace solution to the conflict between Greece and Turkey.
A solution would not directly affect the conflict between Israel and Palestine, but the opportunity for Israel to act as a peace broker could certainly mitigate Israel's reputation for intransigeance. In addition an agreement over the gas pipeline would help to heal the rift between Israel and Turkey over the Mavi Marmara incident.