Netanyahu: Israel to Allocate 60 Percent of Natural Gas to Domestic Needs

Decision to be brought for cabinet approval on Sunday; plan allocates 20% more gas for domestic needs than government's Tzemach committee recommended in September.

Israel will allocate 60 percent of its natural gas reserves to domestic needs over the next 25 years – considerably more than a government committee recommended last year – Prime Minister Benjamin Netanyahu said on Wednesday.

"Israel received a gift from nature – a huge amount of gas. After lengthy and critical meetings, we have decided to increase significantly the amount of gas for use by the Israeli economy," Netanyahu said at a Jerusalem press conference. "The amount of gas will supply the needs of the economy for at least the next 25 years."

The decision will be brought to the cabinet for approval on Sunday, he said. Ministers will be asked to approve a plan that would allocate 540 billion cubic meters of gas for domestic needs, 20% more than the 450 BCM the government's Tzemach committee recommended last September.

The panel's conclusions were subject to dispute, with environmentalists and others advocating a bigger domestic quota to ensure an inexpensive and clean supply of energy locally. Advocates of bigger exports said selling more gas abroad would ensure continued exploration and development and enhance Israel's political weight.

Israel’s proven and probable gas reserves are estimated to be about 850 BCM and may grow to 900 BCM after recent discoveries at the Karish field. At the higher end, the latest export ceiling leaves 360 BCM for exports, the minimum energy companies say they need to justify the investment required to develop Israel's offshore fields.

The controversy continued inside the cabinet, which apparently delayed a vote on export policy that was supposed to have taken place last Sunday. But Netanyahu said on Wednesday that failure to agree on a policy comes at a cost to the economy.

"We don't want to be like countries that delay decisions and remain without gas," he said. "Instead of leaving it in the ground, we want to produce the gas and fill the state's coffers with billions in order to address the budget needs of the country. We must continue to flourish. We need a growth engine. Gas is a growth engine."

He termed the decision a proper balance between the need to ensure the economy had a reliable and cheap source of energy and the need for exports to encourage future exploration and generate income that can be used for the country's social needs.

"Israel will get 60% of the profits from exports," the prime minster said at the news conference, flanked by Finance Minister Yair Lapid, Energy and Water Minster Silvan Shalom and Bank of Israel Governor Stanley Fischer. "We will get $60 billion during the next 20 years."

Shalom, who had been advocating a bigger domestic quota, said the bigger allocation would ensure gas to need the economy's need for 30 years, a timeframe long enough to allow the development of industry and a transportation infrastructure based on the availability of plentiful and cheap natural gas.

"We thus can lower the cost of living because tariffs for water, electricity and gas go down and so does costs for manufacturing companies," Shalom said.

Fischer, who is stepping down in less than two weeks, gave his backing for the plan, calling the 60-40 split between domestic use and exports "balanced" and a "serious and professional decision."

Albatross
Olivier Fitoussi