JERUSALEM, Aug 28 (Reuters) – An Israeli government panel will answer some gaping questions regarding the country’s fast-growing energy sector this week when it presents its final recommendations on how best to develop newly found offshore natural gas fields.
Gas production is set to soar in Israel in the coming decades, thanks to a cluster of discoveries in the eastern Mediterranean, and there has been fiery debate and speculation on what Israel will do with the reserves.
The big question to be addressed is how much of the gas will be for export. If the government, keen on ensuring Israel’s energy security, sets aside too much gas for domestic use, it could turn away foreign investors needed to develop the fields.
“The aim is to strengthen Israel’s energy security,” Energy Minister Uzi Landau said of the committee’s work earlier this month. “Exporting gas is important not just for the economy, but geopolitically.”
If done right, Landau said, the natural gas sector can be “an anchor of stability” in an unstable Middle East.
Nineteen new wells are expected to be drilled in the next two years at a cost of about $2 billion in an area larger than the country itself. The companies hope to find oil in the layers beneath the gas deposits, as well.
Israel is already setting up a natural gas wealth fund, and government officials have said total revenues from gas sales could reach $130 billion by 2040.
In an interim report in April, the committee, headed by Energy Ministry director-general Shaul Tzemach, said that retaining 400 billion cubic meters (bcm) of gas, roughly enough to satisfy Israel’s needs for 25 years, could be the solution.
It suggested that fields with more than 200 bcm of gas must keep at least 50 percent of reserves for the local market. Smaller fields will have a sliding scale on how much they need to set aside, reaching zero, depending on their exact size.
The U.S.-Israeli group developing the Tamar field, with estimated reserves of 274 bcm, has already signed multi-billion dollar contracts to supply Israeli energy companies. Nearby Leviathan, the world’s largest offshore discovery of the past decade with an estimated 480 bcm, had been set for export.
Since the report went public, it has been attacked on both sides – by exploration companies, which want to be able to sell more gas abroad, and by some senior policy makers and environmental groups looking for stricter curbs on exports…Read More>>