Head of Delek Drilling: Without natural gas, the price of electricity would rise

Abu estimates that the first stage of the project will bring in NIS 250 billion to the country’s coffers. “Coal, which pollutes, pays zero tax, and we pay 50%.”

By JERUSALEM POST STAFF
September 12, 2019 21:55
2 minute read.
An Israeli gas platform, controlled by a U.S.-Israeli energy group, is seen in the Mediterranean sea

An Israeli gas platform, controlled by a U.S.-Israeli energy group, is seen in the Mediterranean sea, some 15 miles (24 km) west of Israel's port city of Ashdod. (photo credit: REUTERS/AMIR COHEN)

“Without natural gas, the price of electricity would rise,” said CEO of Delek Drilling Yossi Abu at the Jerusalem Post-Maariv Elections Conference, that was held two days ago in Herzliya.

“We have completed more than 90% of the Leviathan Project, and as we stated at the outset – our goal was to deliver natural gas into Israel before December 2019. We are ahead of schedule. Israel and Egypt have already begun to receive natural gas from the project,” Abu said.

Replying to a question posed by Maariv’s economic commentator Yehuda Sharoni, Abu dismissed allegations about environmental damage. “If we look at what natural gas brings to the Israeli economy, we can see that the majority of production is done with natural gas,” he said. “Gas will dramatically reduce pollution and emissions. The State of Israel has chosen the alternative that will provide the answer for our energy security, and for the quality of the environment. Israel is now completely independent in the area of energy creation. It will make everything that is not natural gas – such as coal, that is used for creation of electricity, and liquid fuels – disappear.”

Abu estimates that the first stage of the project will bring in NIS 250 billion to the country’s coffers. “Coal, which pollutes, pays zero tax, and we pay 50%.” He added “This is an instrument that will also reduce the deficit. It will be more than NIS 1 billion, which each year will reduce the deficit.”

Abu warned that due to the bureaucracy of the planning committees, the government’s decision to establish four gas stations for supplying gas to trucks has not yet been carried out, and not enough is being done to switch cars from electricity and fuel to natural gas.

“The income that the state receives from gasoline taxes is more than NIS 20 billion per year,” he said, as to why the transportation industry has not shifted from gasoline to natural gas. “The State of Israel set aside the resources, but we are stuck in the planning committees. This is something new, and bureaucracy takes time. If Israel can switch to natural gas for transportation or electricity, we will lower our dependence on importing fuel. We will also dramatically lower air pollution and illness. This is a tool that if used properly, can stimulate economic growth and reduce morbidity.”

Abu mentioned Egypt, where there are far fewer bureaucratic issues, regarding the natural gas economy. “We visit Egypt and we see that there are 300 natural gas stations,” he said.

Abu also rejected claims that the NIS 17.72 charge per water purification unit that the electric company pays is higher than the water unit price in the US.

“People will always want to pay less,” he pointed out. “Looking at it on a regional level, the price of gas in Israel is very attractive. Price is a matter of cost. The State of Israel saved NIS 45 billion compared to other fuels, since the introduction of natural gas. We have reduced the fuel costs of the electric company in half. Without natural gas, the price of electricity would have gone up.”

Abu said that the calculation of the costs took into account the high investment costs for development of the reservoirs. “The yield on Tamar is approximately 20%, which is low, compared to the yields elsewhere in the world. And the yield of Leviathan,” he added “is even lower and it will be 19%.”


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