Israel Matzav

Israel to gain energy independence?

Business Week reports that because the natural gas tracts discovered off Israel's Mediterranean coast are substantially larger than previously believed, Israel may actually gain energy independence.

As CEO of Delek Drilling, an Israeli oil and gas exploration company, Zvi Greenfeld is a self-proclaimed optimist in an extremely risky business. But even Greenfeld was taken aback by the news on Aug. 11 that the huge natural gas reserves off the country's central and northern Mediterranean coast discovered by Delek and its partners in January are 16% bigger than estimated just one month ago. Independent energy experts reckon this once energy-poor country now has enough natural gas to meet its needs for the next two decades and may ultimately even transform itself into an energy exporter.

The discovery has raised hopes of further gas finds in a region that to date has been largely unexplored. Delek Drilling and its partners, Houston's Noble Energy (NBL), Avner Oil Exploration, Isramco (ISRL), and Dor Gas hold 16 additional expanses that cover 9,000 square kilometers, more than 20 times the size of the Tamar tract, which initial estimates value at $15 billion. In the near future, extensive seismic tests will be conducted to decide on additional drillings during 2010.

"The Tamar and Dalit discoveries significantly increase the probability of finding gas and/or oil in adjacent areas in the eastern Mediterranean," says Delek Drilling's Greenfeld. "If we find more gas, then there is a greater chance Israel will become an exporter."

The government should do well from this too. Maybe they will even cut our taxes.

Initially, the local economy will benefit from billions of dollars in investments in infrastructure for bringing the gas on shore as well as the construction of a $1 billion, 500-kilometer-long distribution network. And once the gas starts flowing in 2012, the state coffers are likely to swell. "The state treasury will make over $5 billion in royalties and corporate taxes from the production of gas at the Tamar field alone," estimates Gal Reiter, energy industry analyst at Clal Finance & Brokerage, a leading Tel Aviv investment bank.

Additionally, Israel's balance of payments is likely to show an even larger surplus in the coming years as the country reduces its dependence on imported oil and coal. In 2009, Israel will shell out $5 billion for fuel imports. That figure could drop significantly as a greater percentage of local energy needs is met by the offshore gas. "Five years from now gas will provide one-third of our energy as power plants and industry switch over," predicts Amit Mor, CEO of Eco-Energy, a Herzliya-based energy consulting firm. By comparison, gas accounts for 15% to 20% of energy supplies in the U.S. and most Western European countries. Israel's National Infrastructure Ministry is considering adapting the country's bus fleet and possibly cars to run on natural gas.

Golda Meir is known to have quipped:

Moses dragged us for 40 years through the desert to bring us to the one place in the Middle East where there was no oil.

I guess Golda should have given Moses and God more credit.

Heh.

posted by Carl in Jerusalem @ 10:46 AM