Israel Strikes It Rich

Natural gas field will benefit Israel’s economy

Tamar natural gas rig / AP


JERUSALEM — Natural gas began to flow into Israel over the weekend from a large offshore field, ending Israel’s status as a dry patch in an oil-rich region.

The flow came from the first of two enormous gas fields discovered off Israel’s coast in the past three years. The two fields, known as Tamar and Leviathan, are sufficient to supply Israel for 150 years, according to Bloomberg Business Week.

The Bank of Israel estimated that the flow this year from Tamar, the smaller of the two fields, would contribute one percent to Israel’s gross domestic product. Overall, the bank expects Israel’s economy to grow 3.8 percent this year.

The field is located 56 miles west of the Haifa port. The Leviathan field is slated to come online in 2016. The long-term value of the fields at today’s prices has been estimated at about $240 billion. More than half of profits are to be paid in taxes to the Israeli government.

"This is the beginning of a new era," Isaac Tshuva, controlling shareholder of Delek Group Ltd., which holds a major stake in Tamar, told Business Week. "The Israeli economy will be able to exploit natural gas environmentally, geopolitically, socially and economically."

Prime Minister Benjamin Netanyahu told Business Week in an emailed statement, "We are taking a major step toward energy independence."

Noble Energy of Houston is the majority shareholder in the enterprise, holding 36 percent of shares compared to Tshuva’s group, which holds 31 percent. Two smaller Israeli companies are also partners.

The government has not yet decided whether to allocate some of the gas for export or to use it only for domestic needs.

If a substantial portion is designated for export, a host of geopolitical factors come into play, including who gets it, at what rate, and what the political implications are.

Jordan and the West Bank are potential customers, since the rates will likely be substantially less than what they pay now for energy. Israel has received about 40 percent of its natural gas from Egypt, but in the past two years the pipeline in Sinai has been blown up more than a dozen times by militants, forcing Israel to import gas from elsewhere.

Israel’s own offshore infrastructure will be vulnerable to attacks and the Israeli navy and air force have already made preparations to meet them.

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