June 20, 2013 (TSR) – Prime Minister Benjamin Netanyahu announced Wednesday that Israel will keep 60 percent of the natural gas it harvests from its offshore gas fields for domestic use, setting export levels at 40%. The cabinet will vote on a bill to that effect next week.
The Tamar and Leviathan fields, discovered in 2009 and 2010 west of the Haifa coast, are two of the world’s largest offshore natural gas fields. Both are located in Israel’s exclusive economic waters and once they become fully operational, Israel will become one of the world’s 25 leading gas exporters.
“Nature has given the State of Israel a gift — large quantities of natural gas,” Netanyahu said in a joint press conference with Finance Minister Yair Lapid, Energy and Water Resources Minister Silvan Shalom and Bank of Israel Governor Stanley Fischer, held at the Prime Minister’s Office in Jerusalem on Wednesday afternoon.
“The decision balances between the need to ensure a cheap and available source of energy for Israelis and the need to export. This amount of gas will meet our energy needs for at least the next 25 years,” Netanyahu said.
“We are not interested in becoming one of those nations that procrastinated and ended up without gas. We want to harvest the gas and produce billions [of dollars] in state revenue in favor of the country’s budgetary needs. We have to drive growth forward and natural gas is a growth engine,” Netanyahu said, adding that Israel stands to receive $60 billion in taxes and royalties from the sale of gas over the next two decades.
The decision spells a dramatic departure from the Energy and Water Resources Ministry’s recommendations to export 53% of Israel’s natural gas, which prompted a public outcry. It also ended months of uncertainty during which the various drilling groups involved in the projects threatened to suspend the development of the offshore wells unless they were allowed significant exports.
Netanyahu further decided that the gas harvested from Tamar will be stored as Israel’s emergency reserves and will not be exported.
The Energy and Water Resources Ministry estimates that Israel’s offshore fields can produce some 900 billion cubic meters (31.8 trillion cubic feet) of gas. The government’s new policy will see 360 billion cubic meters (12.7 trillion cubic feet) of gas exported, instead of 450 billion cubic meters (15.8 trillion cubic feet). Some 540 billion cubic meters (19 trillion cubic feet) will be processed in favor of Israel’s own energy needs.
The government’s gas export policy will allow the cabinet to approve exports to Jordan, under certain circumstances. Such exports will be allocated from Israel’s usable reserves.
‘Nothing short of a miracle’
“There are all sorts of plans you can make, but you can’t control luck,” Lapid told reporters. “These natural gas discoveries are nothing short of a miracle for the State of Israel and we are grateful for them.”
Lapid defended the decision to export gas saying it will “create $60 billion in revenue over the next 20 years. This money will go toward education, health and welfare. It will introduce new players [to the market] and we will make sure the royalties are well spent.”
“The goal is to ensure Israel’s energy security by prolonging our energy futures from 25 years to 30 years,” Shalom said, adding that state revenues from gas exports would contribute to lowering the cost of living in Israel.
The failed offshore drilling attempts at the Sara and Myra fields, located off the coast of Netanya in central Israel, “encouraged [the government] to ensure the domestic gas supply,” he said.
Fischer told reporters that the Energy and Water Resources Ministry’s committee on gas exports, headed by ministry Director-General Shaul Tzemach, “was very professional. The [gas] reserves now stand at 900 billion cubic meters and the government’s export decision increases the quantity Israel will retain.”
“Tamar is a huge field, but Leviathan is one of the biggest fields discovered in the past decade. We want exports and we want the taxes derived from them. We should turn some of our underwater gas into money. The companies [involved in the project] will not wait 30 years to get their money. We want them here and we want them developing Leviathan,” Fischer said.
The opposition leveled harsh criticism at the government’s proposed policy.
Opposition Leader MK Shelly Yachimovich (Labor) panned it as “a shameful capitulation to the pressure exerted by tycoons and a major blow to the economy, society and security.”
Yachimovich further said that the facts presented at the Prime Minister’s Office’s press conference were false: “In an underhanded and speedy maneuver, which cannot be justified in any way when it comes to a decision that affects our children’s future, four very well-off men made a decision that will hurt the majority of the public.”
“The rushed decision to export 40% of our natural gas will bind the state forever and it retroactively prevents any chance to change the contracts [signed with drilling companies] in the future,” she said.
Knesset Member Dov Khenin (Hadash) called the decision “the great gas robbery.”
Yachimovich, former Knesset Speaker Reuven Rivlin (Likud), MK Moshe Gafni (United Torah Judaism) and MK Avishay Braverman (Labor), together with several environmental and social organizations, plan to file a High Court of Justice petition against the decision.
Sources familiar with the issue said the petition will ask the High Court to declare the government’s decision null and void and to compel the cabinet to pursue the customary and transparent legislative route, rather than an expedited one. It will also argue that the process should follow the legislative guidelines set in 2010 by the Sheshinski Committee on the fiscal and tax policy of Israel’s natural resources.
Source: Israel Hayom