Despite the contention surrounding Israel’s prospective natural gas export
policies, Shaul Zemach, director-general of the Energy and Water Ministry,
insisted on Tuesday that Israel will maintain a sufficient supply for
domestic-electricity needs and also for the petrochemical
Zemach was addressing participants of the First International
Conference on Natural Gas Chemistry: Natural Gas is Much More than Cheap Fuel,
an event organized in Tel Aviv by the Energy and Water Ministry and the Israel
Chemical Society. While it is still up in the air exactly how the government
will allocate the nation’s sudden influx of natural gas, academics, regulators
and policymakers from Israel and around the world discussed opportunities for
the country to use the resource as a raw material for more than just generating
The Zemach Committee, a team of gas experts headed by
Zemach, recommended last fall that Israel allocate a maximum of 500 billion
cubic meters of natural gas for export. This number has had environmentalists up
in arms, as they have collectively expressed a desire to preserve the gas for
both domestic energy production as well as the petrochemical and alternative
fuel development industries.
At the conference, however, Zemach stressed
that his plan would maintain a sufficient domestic gas supply to fulfill these
“What we tried to do is try to give the certainty that the
industry needs in order to maintain investments, to develop the industry in an
efficient manner,” Zemach said.
“That includes not only the natural gas
industry and oil industry and refineries but also the petrochemical industry. We
believe there is potential for that industry.”
Over the past decade,
natural gas consumption in Israel began as 1.19 billion cubic meters per year in
2004, rising to 5.34 billion cubic meters in 2010 and back down to 4.96 billion
cubic meters in 2011 and 2.55 billion cubic meters in 2012 after the Egyptian
gas supply to Israel ceased, Zemach explained.
This year, the ministry
expects gas consumption to rise back up to 7.25 billion cubic meters, increasing
to about 9.7 billion cubic meters in 2015 and 13.3 billion cubic meters in 2020,
The Bank of Israel is projecting that that the country’s GDP is
gaining about 1% growth from the new natural gas activities, accounting for 25%
of growth in 2013.
“We will not sacrifice domestic industries for the
sake of exporting natural gas,” Zemach said. “But the other side of that very
same point is that those industries have to have some economic and technology
grounding. And that’s for you to explore and that’s for us to
And I think that’s the new challenge of natural gas for the
And I’m sure that after this debate is finalized the
Israeli economy is going to rebound.”
Ariella Berger, head of oil
alternatives and energy research at the Israeli Institute for Economic Planning,
said during a panel discussion at the conference that she takes particular issue
with these forecast numbers, and that the ministry has not accounted for all of
the country’s future needs. While the population today is roughly 8 million, in
2050 it should be around 12 billion, and in terms of Israel’s gas needs “the
picture changes substantially,” she said.
Due to population growth,
increased need for gas fuel mixes and energy industry’s “own use” – the amount
of energy required to extract the resource – the numbers will likely be much
higher, Berger said.
“It’s not a very simple matter. The effect on the
economy is non-linear,” she said.
As far as petrochemical development
from natural gas sources goes, the gas itself – methane in Israel’s case –
presents “a very substantial challenge to activate in a way that is commercially
viable,” said Dr.
Richard Schlosberg, chairman of the US-based Chemical
Research Committee and a consultant, who previously worked for
“There are lots of different uses in the end sector and each
has a different value for the economy,” he said.
Unlike corporate gas
giants such as Exxon or Shell, Israel is not constrained in how it will develop
its petroleum, as the country does not have an ingrained infrastructure for
dealing with the resource, Schlosberg explained. Rather than focusing on simply
alternative fuel development, the country should look to the potential of the
chemical industry, he added.
“We believe that the demand around the world
for fuels is not growing nearly as fast as the demand for chemicals,” Schlosberg
While developing olefins like ethylene and propylene would be mean
competing against “the big guys,” Israel could take a different approach and
work on developing more complicated oxygenates from natural gas – like glycols
and acrylates, Schlosberg said.
Israel could thereby use its natural gas
as “something that gives them a sustainable opportunity to meet and beat
competition depending upon the pricing,” he said.
A higher level of
technology, with which Israel is certainly equipped, is required for such
complex but highly profitable chemistry, according to Schlosberg.
you don’t have an existing petrochemical industry, you have a blank page,” he
said. “I think you could 20 years from now be among the leading providers of
chemical technologies and chemical products.”