Tamar Partners Fight Gas Export Curbs

Two exploration companies operating in the Tamar offshore field unhappy with low percentage of gas to be exported

Two weeks after the High Court of Justice rejected a challenge by social justice and environmental groups over the government's decision to allow the export of 40% of the country's natural gas reserves, the matter is returning to the court, this time at the behest of two gas exploration companies.

Last Thursday, Isramco and Alon Natural Gas Exploration petitioned the court over the formula the government is using to keep 60% of Israel's major offshore gas reserves for domestic use. The petitioners claim the method would improperly discriminate against the Tamar drilling site in favor of the larger Leviathan site off the country's coast. Isramco has a 28% stake in the Tamar offshore exploration site in the Mediterranean, some 80 kilometers (50 miles) west of Haifa, while Alon has 4%.

The Tamar partners note that the government altered a recommendation made by an official panel that considered the matter, the Tzemach committee, and increased the quantities of gas reserved for the local market by lowering the export quota for Tamar. As a result, only 20% of the gas produced at Tamar will be available for export, compared with 50% to 75% of the reserves at the huge Leviathan site.

The idea that Tamar's reserves should be limited to domestic use - as a strategic reserve for the country - was actually proposed by the Energy and Water Resources Ministry on the basis that production from Leviathan would be exported. It was also argued that the Tamar project was the recipient of special statutory benefits and had already entered into contracts for the sale of 70% of the reserve.

In an ironic twist, the petitioners' partners at the Tamar site, U.S.-based Noble Energy (with a 36% stake) and Delek Group subsidiaries (31%), do not have the same concerns because they also own an 85% interest in the Leviathan site. The government's formula is more advantageous to them than if it had reduced export quotas across the board by the same proportion at all of the country's drilling sites.

It is thought that the two gas exploration companies had been awaiting the outcome of the recent petition by the social justice and environmental groups, and filed their own case only after the other groups failed to change the government's course.

Albatross