Tamar Gas Supplies Suspended Amid Concern Over Rocket Attacks

Fighting hasn’t yet run up enough costs to require extra budget, Finance Ministry says

Albatross

Israeli Energy Minister Yuval Steinitz on Sunday ordered natural gas supplies from the offshore Tamar field to be suspended as rocket attacks by Gaza militants marked their second day.

The ministry said Steinitz had declared a “national gas sector emergency” with the aim of ensuring that electric power generation isn’t interrupted and can be produced from other, costlier fossil fuels like diesel. Liquefied natural gas, which comes from a ship processing it anchored off the coast of the northern town of Hadera, will be allocated to natural gas users.

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Israel receives most of its natural gas from Tamar, which is located some 90 kilometers (56 miles) in deep waters of the Mediterranean. It production platform stands just 20 kilometers off the coast of southern Israel in sight of the Gaza Strip, where Hamas and other militant groups are launching rocket attacks.

Despite repeated criticism that the facility consisted of only a single pipe, the government has never asked the partnership that controls the Tamar field, which is led by Noble Energy of the United States and Israel’s Delek Group, to lay a second pipeline.

In any case, a second, bigger gas field – Leviathan – is due to begin producing gas by the end of the year.

Energy industry sources said on Sunday that there has been no reported attempts by Gaza militants to strike the platform, but they speculated that the government had gotten specific warnings of plans to do so. A rocket striking the platform when it is filled with gas risks causing a major fire or explosion.

A government order halting the flow of gas is an unusual event and points up the challenges Israel has faced in devising a way to fully defend the strategic site. The platform is protected by the navy and in 2017 there were tests to defend it with the Iron Dome anti-missile system. The first missile boat with an Iron Dome system abroad is due to be deployed in the next few months.

From a budget perspective the fighting comes at awkward time for the government, which is grappling with overspending that is expected to reach more than 10 billion shekels ($2.8 billion) over targeted deficit for 2019.

For now, Finance Ministry officials said on Sunday, the fighting has not gone on long enough nor run up expenses that can’t be met out of the ordinary defense budget and Defense Ministry officials haven’t yet brought up the issue of a supplementary budget, If they do, it will likely go through Prime Minister Benjamin Netanyahu’s office.

The defense establishment is only entitled to extra spending beyond its budgeted amount once a conflict is declared an “exceptional event.” That has occurred three times in the last 15 years, and the amounts the army got have varied a lot.

After the Second Lebanon War, which lasted just over a month, the defense establishment got an additional 8.2 billion shekels for the additional costs. Following Operation Cast Lead, the three-week conflict with Hamas in 2008-09, the supplement was 2.5 billion shekels and after Operation Protective Edge in 2015, which lasted more than six week, the allocation was 7 billion.

In 2007, the government’s Brodet committee recommended that a reserve if 800 million to 1.2 billion shekels be set aside every year for unexpected events like a war that would be used when the prime minister and security cabinet authorized it. The proposal was never put into effect.

If the current fighting, which has seen 600 rockets launched by Hamas and other groups from Gaza, continues for several more days, it will begin to strain the state budget.

After of the end of March, the deficit was running at 3.4% of gross domestic products for the 12 previous months, well above the targeted level. Ironically, defense spending was down 1.2% in the first quarter of 2019, despite a budgeted rise of 1.9%. But spending by civilian ministries soared in the first quarter.

Even the cost of a few days of fighting can be enormous. Each Iron Dome anti-missile projectile costs between $50,000 and $100,000. Each smart bomb dropped by a fighter plane costs several thousand dollars and one hour of flying time some $20,000. Reserve soldiers cost an average of 500 shekels a day, which the army pays to employers as compensation for calling up workers. The cost of putting a reservist in uniform costs more.

The government also covers much of the cost from damage to civilian property and other costs. On Sunday, the Finance Ministry and the Israel tax Authority announced that they would extend the time it would pay compensation to parents who cannot go to their jobs due to school closures in the south. The extension, till June 30, is subject to Knesset Finance Committee approval.