Government Panel Wants Oil Refineries in Northern Israel Shut Within 10 Years

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A protester at a demonstration against Bazan Group, which owns the Haifa refineries, two years ago.
A protester at a demonstration against Bazan Group, which owns the Haifa refineries, two years ago.Credit: Rami Shllush

A committee of Israeli ministry director generals announced its recommendation on Monday to close the oil refineries in the Haifa Bay area within a decade, and to replace the products they make with foreign imports. The committee also recommended that a fertilizer factory in the Haifa Bay area be moved to the Negev, and that the oil terminal in the Haifa Bay suburb of Kiryat Haim be closed.

However, environmental activists are concerned that the lack of a timetable for implementation of the recommendations weakens them.

The government recommendation comes after a prolonged fight by environmental groups and residents of the Haifa Bay against the presence of petrochemical industries in the region, which they say is harmful to health. Research has linked pollution with excess mortality and morbidity. In recent years, concerns about the climate crisis have intensified calls to close down the factories. The refineries belong to the Bazan Group, owned by Idan Ofer.

The committee of ministry director generals was established shortly after the huge explosion in the Beirut Port in August 2020, and it consists of representatives from various ministries, among them the Prime Minister’s Office and the ministries of finance, energy, environmental protection, interior, defense, transportation and health. The committee, headed by the chairman of the National Economic Council, Prof. Avi Simhon, is now in the process of releasing its recommendations for public comments, after which it will be conveyed to the government, which will have to decide the matter.

If the government adopts the recommendations, it will mean a huge change for the Haifa Bay area. The area where the refineries are located will have to be rezoned for housing and commerce. The Planning Authority in the Interior Ministry is now working on a new plan for the area that calls for the construction of some 70,000 housing units after the industry is removed. Proper storage places for large quantities of future imported refined oil products will have to be found. These products are used for various industries, including asphalt for roads and plastics. The committee noted that if it finds and can prepare suitable sites earlier, it will be possible to close the refineries earlier.

The Energy Ministry believes that the need for refined oil products will not decline until the end of the decade, and will remain at some 10 million tons a year. Demand is expected to decline with the move to a carbon-free economy based, among other things, on electric cars in the face of the climate crisis. On the other hand, demand for cooking gas, which is also an oil byproduct, is expected to remain high, and storage sites must be found for it. The state will also have to find a solution for storage of natural-gas condensate from the Leviathan offshore natural gas field. Condensate is a byproduct of oil created during the production of natural gas and it is currently channeled to the Haifa Bay refineries. One alternative to be examined by planners and the Energy Ministry is to channel the condensate to the power station in Hadera for subsequent export.

The oil terminal in the Haifa suburb of Kiryat Haim, in August.Credit: Tomer Appelbaum

Another implication of the committee’s recommendations is to expand the import and storage of refined oil products and cooking gas via the Ashkelon Port by means of the Eilat Ashkelon Oil Pipeline company.

An impediment to city’s growth

The ministry director generals based their recommendations on research and earlier data culled by the consultant firm McKinsey for the Israel Lands Authority. Based on this research, the ILA proposed the removal of polluting factories from the Bay area, rehabilitation of environmental nuisances and replacing the industrial zone with housing and employment opportunities.

The main reason for the move is to encourage economic and demographic growth of the Haifa metropolitan area, which has stagnated in recent years. Such development is expected to have a positive impact on all of northern Israel. According to McKinsey, as well as the committee, industrial pollution is the main obstacle to attracting new residents to the area, and the refineries and fertilizer factory are the main cause of the pollution.

A public opinion poll conducted two years ago by the National Economic Council also confirmed that pollution is an impediment to the development of the city. According to the director generals committee recommendations, the issue of air quality in Haifa is a complex one, and the refineries and industry are not necessarily the main cause. But with regard to carcinogenic pollutants, as well as extreme events that cause public panic, these installations play a significant role, even after major efforts were made to reduce pollution.

The committee notes that one of the greatest problems is the large concentration of dangerous materials used in industry in the Bay area. Their release into the atmosphere as a result of a mishap, a security-related event or an earthquake – the bay is on a geological fault – could have a devastating impact on area residents.

According to the committee, it is not economically feasible to move the refineries to another location. The Kiryat Haim oil terminal was originally to have moved to an area southeast of the refineries, but it would also be closed because it mainly serves the refineries. However, it seems that its closure will be delayed by a few years, which worries the Environmental Protection Ministry, which wanted to see it shut down within four years.

“After a long and thorough process of more than four years, a recommendation is emerging that recognizes that the good of more than half a million residents of the Haifa Bay area requires the cessation of the petrochemical activities in the Bazan compound [formerly Haifa Oil Refineries], the closure of the oil terminal in Kiryat Haim and moving the fertilizer factory to the Negev,” committee chairman Simhon noted. “This move must be made while ensuring Israel’s energy security,” he added.

The director generals committee also discussed the compensation the state would have to pay to refineries owner Idan Ofer, but it does not intend to publish financial data on the matter. According to the committee, this matter will need to be resolved in negotiations between the government and the Bazan Group. Not all committee members agreed that the recommendations should be published now; officials in the Finance Ministry strongly objected to this. Those who agreed to shut down the refineries could not agree on the timetable and the target of within 10 years was a compromise.

Objections of committee members to the plan will apparently be published when the final report comes out. The Finance Ministry declined to comment on the committee’s decisions. The recommendations are being published although there is no government to relate to them or decide on their implementation. The committee believed that the recommendations should still be published because a new government will mean new director generals; they would have to study the matter all over again and meanwhile the recommendations of the current committee would be shelved.

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