Israeli Government's New Estimates: No Need for Gas From Leviathan Till 2020

Forecast may have played role in antitrust chief's decision to void cartel pact.

Avi Bar-Eli
Avi Bar-Eli
Send in e-mailSend in e-mail
Off Haifa coast, oil rig at enormous Leviathan natural gas field.
An oil rig in the Leviathan natural gas field off the Haifa coast.Credit: Albatross
Avi Bar-Eli
Avi Bar-Eli

The government’s latest forecast for domestic natural gas consumption, which have not been revealed until now, says Israel won’t need natural gas from the giant Leviathan field until 2020 or thereabouts, TheMarker has learned.

The revised estimate comes amid lower-than-expected consumption of natural gas by the state-owned power monopoly Israel Electric Corporation and big industrial users.

The new estimates were leaked days after Antitrust Commissioner David Gilo took the industry by surprise and said he was voiding an agreement he made with Leviathan’s controlling partners — Delek Group and the U.S. company Noble Energy — that would have enabled them to retain their near-monopoly in natural-gas production.

His decision, which will likely force one or both of the companies to sell stakes in Leviathan or the smaller Tamar field, will almost certainly delay Leviathan’s going into production by at least two years, industry sources say. The new forecasts pushing the need for Leviathan gas back several years may have been a factor in Gilo’s about-face.

On Monday, a meeting was held, for the first time, of all the regulators with an interest in the future of the gas cartel, although Gilo himself failed to attend due to illness. The meeting, which included National Infrastructures, Energy and Water Resources Ministry Director General Orna Hozman-Bechor, who last week blasted Gilo’s decision, and Gilo’s deputies, was described as tense.

Still, officials agreed to meet at least twice more before the hearings Gilo is to hold with Delek and Noble before he makes his final decision on the monopoly.

The government is unlikely to formally release its new forecasts because market demand is dynamic and could change again quickly.

In addition, Israel needs the spare production capacity that Leviathan was supposed to provide to complement the already online Tamar field, so that the exact date when Israel will actually need Leviathan gas is less relevant than the need for extra capacity in the event of technical or other problems at Tamar.

The Leviathan partners are obligated to begin production in the first quarter of 2018 and cannot export gas from Tamar until they do so. Nevertheless, officials are concerned that Delek and Noble may slow development of Leviathan if they don’t believe there will be demand for its gas.

The forecast undermines the warning from the National Infrastructures, Energy and Water Resources Ministry last week that Gilo’s decision could endanger Israel’s energy supplies. The ministry’s own Gas Authority estimated four months ago that lower-than-forecast usage would enable Israel Electric Corp. to resell some of the gas it is contractually obligated to buy from Tamar because it doesn’t need it.

As published in TheMarker last month, Israel is expected to use 7.8 billion cubic meters of gas this year, a 10% increase over 2013 but 10% below the earlier forecasts of 8.6 bcm.

Nevertheless, the authority said many natural-gas users would experience a shortage because there is only one pipeline delivering Tamar gas onshore and most of its capacity has been reserved by IEC.

Click the alert icon to follow topics:

Comments

SUBSCRIBERS JOIN THE CONVERSATION FASTER

Automatic approval of subscriber comments.

Subscribe today and save 40%

Already signed up? LOG IN

ICYMI

Palestinians search through the rubble of a building in which Khaled Mansour, a top Islamic Jihad militant was killed following an Israeli airstrike in Rafah, southern Gaza strip, on Sunday.

Gazans Are Tired of Pointless Wars and Destruction, and Hamas Listens to Them

Trump and Netanyahu at the White House in Washington, in 2020.

Three Years Later, Israelis Find Out What Trump Really Thought of Netanyahu

German soldier.

The Rival Jewish Spies Who Almost Changed the Course of WWII

Rio. Not all Jewish men wear black hats.

What Does a Jew Look Like? The Brits Don't Seem to Know

Galon. “I’m coming to accomplish a specific mission: to increase Meretz’s strength and ensure that the party will not tread water around the electoral threshold. If Meretz will be large enough, it will be the basis for a Jewish-Arab partnership.” Daniel Tchetchik

'I Have No Illusions About Ending the Occupation, but the Government Needs the Left'

Soldiers using warfare devices made by the Israeli defense electronics company Elbit Systems.

Russia-Ukraine War Catapults Israeli Arms Industry to Global Stage