Although there is a low probability of finding sizable quantities of oil in
Israeli waters, its discovery could have a bigger impact on the economy than
recent discoveries of natural gas, global financial-services firm UBS said
“Our calculations suggest that, in the event of success, oil
could potentially deliver a boost to GDP growth, the budget and the external
balance that might potentially be even bigger than the impact from natural gas,”
UBS analysts Roni Biron, Ziv Tal and Reinhard Cluse wrote in a report on the
Israeli gas and oil sector.
“This would also imply a larger appreciation
potential for the shekel and an even greater requirement to manage the resulting
macroeconomic challenges through a carefully managed sovereign-wealth fund,”
they said, adding that the picture would become clearer after more meaningful
results of geological tests on oil are released later in the
Regarding natural gas, they referred to recent acts of sabotage on
the pipeline between Israel and Egypt.
“The exploration of its
natural-gas resources has become a strategic priority for Israel, particularly
given the political turmoil in the Middle East and North Africa, and
specifically Egypt, which provides Israel with 40 percent of its gas-fired power
needs and 20% of its electricity generation needs,” they wrote.
natural-gas reservoirs have been discovered off the northern coast of Israel in
the past two years, and together they are the two biggest deep-water gas
discoveries in the world in the past decade: Tamar, which measures in at 8.7
trillion cubic feet and which analysts believe will be used primarily for
domestic consumption, and Leviathan, at 16 trillion cubic feet, which it is
believed will turn Israel into a natural- gas exporter.
According to the
UBS scenario, natural- gas exports from the Leviathan field will begin in 2017
at almost $3 billion per year, before rising to almost $6b. in 2020. This would
correspond to revenues of 0.7%-0.8% of gross domestic product in 2017-2019 and
1.3%-0.7% of GDP in 2020- 2030, the analysts said. The decline in the decade
beginning 2020 would be due to the fact that export revenues would remain
constant as GDP rises.