Tzemach Report receives mixed reactions

The release of the Tzemach Report on natural gas has elicited negative reactions from green groups and MKs, but according to financial analysts its conclusions are good for investors.

The report, which was presented to Prime Minister Binyamin Netanyahu on Wednesday, recommended limiting natural-gas exports to 500 billion cubic meters, while saving at least 450 b.cu.m. for domestic needs – a 50 b.cu.m. increase from the proposal made in the preliminary report.

Israel has about 800 b.cu.m. in confirmed natural-gas resources from its two largest offshore reserves, Tamar and Leviathan, according to the report. In addition, there are 680 b.cu.m. in known prospective resources, of which about 150 b.cu.m. are said to have at least a 90 percent probability of success, it said.

Each reserve will be required to safeguard a specific amount of natural gas for the domestic market, depending on its size.

Fields containing in excess of 200 b.cu.m. of natural gas will be required to allocate at least 50% to Israeli consumers, fields of 100-200 b.cu.m. will have to save 40%, and fields of 25-100 b.cu.m. will have to save 25%.

However, larger gas reserves may be able to export more than their official allocation; a clause enables them to trade exportation rights with smaller reserves that commit to distributing more than their minimum allocation to the domestic market.

“Domestic needs take precedence over energy,” Energy and Water Minister Uzi Landau said when the report was released. But he stressed that exportation would allow Israel’s natural-gas market to develop, saying it would bring in foreign investors and also have geopolitical benefits.

Adam Teva V’Din (Israel Union for Environmental Defense) expressed its opposition to what it called “a fire sale” of Israel natural-gas resources. It urged its supporters to join it in lobbying the government to safeguard gas for future generations.

“Israel’s offshore natural-gas reserves are a strategic asset that will ensure the state’s strength and survival in the coming generations,” the organization said in a statement. It said it has drafted a bill that would ensure Israel saves enough natural gas to meet energy needs for 50 years, with an appropriate allocation of the resources among the current and future generations.

A number of MKs released highly critical statements against the report. Labor chairwoman Shelly Yacimovich said it favored the gas companies “even more than they themselves could have imagined.”

On the other hand, Harel Finance called the conclusions “very positive” for investors, saying they end uncertainty over the question of exportation.