Israel government to give more money to factories switching to natural gas

In an attempt to help out the domestic market, government will more than double the size of grants given to companies to convert their factories to natural gas power.

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April 21, 2016 19:46
2 minute read.
A bulldozer works at a magnesium factory near the Dead Sea.

A bulldozer works at a magnesium factory near the Dead Sea. . (photo credit: REUTERS)

 
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Israel’s natural gas market has been trying to gain a sizable foothold in the energy sector for the past several years but roadblocks both in the existing and developing markets have slowed down the pace of expansion in recent months.

In an attempt to stimulate the domestic market, the Economy Ministry, Finance Ministry, National Infrastructure and Energy and Water Resources Ministry announced on Thursday that they will more than double the size of grants given to companies to convert their factories to natural gas power.

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NIS 1.125 million will be given to companies that will use between 100,000 and 1 million cubic meters of natural gas annually. Previously, consumers using between 100,000 and 500,000 cu.m. annually were eligible for NIS 750,000 in grants while those using between 500,000 and 1 million cu.m. could get NIS 400,000.

Large companies with contracts to use over 1 million cu.m. of natural gas annually will now receive NIS 650,000 instead of 250,000.

The government has been giving out grants to encourage the conversion to natural gas since 2009, said Nahum Itzkowitz, director-general of the Economy Ministry’s Investment Center. More money is given to smaller users, he said, because it takes more of their resources to make the switch to natural gas and will take longer to see the economic benefits of the move, while he said that larger companies will see benefits sooner.

He said that approved companies will receive half of their grant money in the initial 60 days after approval in order to convert and connect their factories to the natural gas network. The other half, he said, will be granted once the factory is up and running with gas fuel.

The grant increase will remain in effect until April 1, 2017, but only as long as the three-month average price of oil remains under $60 a barrel.

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Though grants were stepped up in 2014, natural gas power has become less economical due to dropping oil prices globally over the past few years. For example, in February, Phoenicia Ltd., located in Nazareth Illit, a company that produces flat glass, announced its plan to return to petroleum fuel, despite having received a hefty government subsidy in 2012 to convert its factory to natural gas power.

According to the Economy Ministry, there are currently 35 companies connected to the country’s natural gas network, and natural gas accounts for a third of Israel’s energy resources.

Currently, Israel’s natural gas comes from the off-shore Tamar Reservoir. The larger, 621-billion cu.m. Leviathan reservoir could join the grid as soon as 2019 but the development is on hold for the time being after the High Court struck down a key segment of its development framework.

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