Israel natural gas exports worth $60bn over next 20 years
By John Reed in Jerusalem
©Lihee Avidan
The Sedco Express drilling rig above the Tamar gas field in the Mediterranean
Israel’s government on Wednesday said it had reached a long-awaited decision on exports of its offshore natural gas, which it said would bring the country a windfall of $60bn of profits over the next two decades.
Government officials led by Prime Minister Benjamin Netanyahu said that they had decided to reserve 60 per cent of the gas for domestic use. They said this amount would be enough to meet Israel’s gas needs for at least the next 25 years.
The proportion of gas Israel is reserving for its domestic market is slightly higher than the 52 per cent recommended by a government committee charged with devising export policy, which presented its findings last year.
The Israeli government’s decision on the Tzemach committee’s findings had been awaited by investors in the sector, led by Noble Energy of the US and Israel’s Delek. The two companies began pumping gas at the offshore Tamar field earlier this year, and wanted clarity on government’s export guidelines before moving to exploit the larger Leviathan field.
Analysts say that Israel’s Mediterranean gas finds, among the largest of their kind in the world in recent years, have the potential to boost the economy for years to come and could transform the Middle East’s energy map.
Noble and Delek are studying projects around exporting liquefied natural gas or pumping the resource via pipelines to Turkey, Jordan, the Israeli-occupied West Bank, and possibly Egypt.
Israel’s government is set to keep 60 per cent of profits from gas exports for itself, it said on Wednesday, in line with its current royalty policy.
Gas from the Tamar field, which for now supplies only the Israeli market, is due to contribute nearly one percentage point to the country’s GDP growth this year.
Mr Netanyahu said he had reached the decision on gas exports in conjunction with Yair Lapid, finance minister, Silvan Shalom, energy and water resources minister, and Stanley Fischer, outgoing governor of the Bank of Israel.
His government said the decision “balances the need to ensure a source of available and affordable energy for the citizens of Israel and the need to export gas from which the state will generate profits to be invested in the welfare and safety of citizens.”
It will be submitted for approval by Mr Netanyahu’s cabinet on Sunday.
The decision comes in the context of growing resource nationalism in Israel, championed by a new cohort of populist members of parliament that took power after January’s national election.
Earlier this week Mr Lapid announced the establishment of a committee due to examine the royalties paid by private entities profiting from Israel’s natural resources other than gas.
The committee will be headed by Eytan Sheshinski, who headed an earlier committee that advised government on natural gas taxation policy in 2011. Shares in Israel Chemicals, which produces potash fertiliser at the Dead Sea Works, plunged on the news.
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