MKs seek to ensure emergency oil reserves

The government last year sold its Ashdod refinery to Paz Oil Co. for NIS 3.5 billion and now will sell the larger Haifa facility in an initial public offering.

January 17, 2007 07:17
2 minute read.
oil tanker 88 298

oil tanker 88 298. (photo credit: Ariel Jerozolimski)


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Following a shortage of energy supplies during the war in the North, a special Knesset committee session convened this week to examine ways to ensure the situation doesn't repeat itself, especially after the pending privatization of Oil Refineries (Bazan). "During the war our supply of benzene was depleted because we didn't hold emergency stock," said Ohad Yehiel, director-general of the energy department of the National Infrastructure Ministry. "The working assumption was that the combined stock of the gas companies would be enough, but they had difficulty importing because of cost and security issues. As a result of the war we have recommended to change the legislation governing the issue." The meeting highlighted the lack of storage facilities, in particular the absence of Israeli tankers supplying oil despite a previous government decision to do so. "An Israeli team should always be mobilized in times of war," said Avi Levy, chairman of the Naval Officers Union. "Foreign tankers will be afraid and, in the moment of truth, will not enter the country." Ohad Marani, chairman of Haifa Oil Refineries, responded that during the war the problem had not been of foreign ships unwilling to come to the country, but rather that the ports were closed to allowing entrance of materials which could endanger the country. Marani also gave a commitment that Bazan would present a tender by the end of March to lease an Israeli tanker for a three-to-five year period, which he guaranteed would stand after the company is privatized. The Knesset Economics Committee, which hosted the discussion, resolved that the handling of oil by Israeli tankers would reduce the emergency supply problem and the cost of storage. It acknowledged that the matter had not been effective in law. The committee gave a sense of urgency to the matter given the government's plans to sell off the last of its assets in Bazan by the end of March as part of its efforts to increase competition in the local energy market. The government last year sold its Ashdod refinery to Paz Oil Co. for NIS 3.5 billion and now will sell the larger Haifa facility in an initial public offering. The committee concluded that the government, in selling off the Ashdod refinery, should have made the sale conditional on the buyer's use of Israeli tankers, and should have provided subsidies for this purpose. It appealed to the government to use the rationale in the Haifa privatization and recommended that it obligate local oil importers to buy from the Israeli tankers.

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