One of the hottest news on the market concerns Israel gas field Leviathan. Leviathan was found in 2010, a year later Tamar, 10.8-trillion cubic feet gas field. Experts have evaluated the volume of natural gas in the field as 16- trillion cubic feet, however, right now the volume is considered 20% less. Nevertheless, an Israeli dream to get independent energy resources is coming true, as well as a dream to make money thanks to commodities. As it happens with dreams, they penetrate the reality too slowly. In order to get independence, we need to catch purchasers for natural gas and reach consensus with other providers on the markets.
Where gas for the country comes from?
We have been supplied by Egyptian Natural Gas Holding Company (EGAS). Since 2004 the gas has been produced from the fields off the coast of Ashkelon. Two small fields contain 1.6 trillion cubic feet of natural gas. It’s like a pot against a tank in comparison with Leviathan. Gas from Tamar already feeds more than half needs of Israel Electric Corporation, so our windows are bright in nights thanks to Tamar.
Why did not Israel work out the Leviathan gas field?
Our government interests in reducing duopoly of Delek Group Ltd. and Texas-based Noble Energy Inc. The two companies hold 45% and 40% stakes in Leviathan. So the government intends to stimulate competition and avoid the situation when we will be forced to buy the gas of our own from the third party. According to the proposed framework, both companies must sell part of their stakes in Tamar within 6 years. The duopoly would be overcome if Australia’s Woodside Petroleum will buy a quarter of Leviathan. Unfortunately, Australians walked away, citing commercial obstacles in Israel. Meanwhile, Israel’s Energy Minister has approved the Leviathan gas field development. The Knesset passed the deal on September 7.
How much does it cost to develop the gas field and what we will earn?
The Leviathan development is the largest project in our history. The gas companies are seeking about $4 billion to get started. A contract for engineering work worth an estimated $120 million is waiting for a partner, ready to sign it. Leviathan will nourish the industry in 2019. The delay will put the deal at risk. These days with the oil crisis and troubles on the energy markets, the task is pretty complicated. Nevertheless, the Leviathan + Tamar could generate almost $275 billion in revenues in next three decades. The people would get at least half of the money through royalties and taxes. Business opportunities and new jobs will give a chance to ease the situation on the labour market.
Who will get the Leviathan gas?
That is the question. Except for Israel and Palestinian Authority, Egypt and Turkey are considered as the main destination for pipelines. Both countries look at regard Israel as someone to co-exist without inspiration. Istanbul is more desirable, but it turns out to become more authoritarian, to move close to Russia and Iran. Even so the money speaks for itself. Turkey is ready to benefit. Europe and the USA look for a chance to get rid of dependence on Russian gas. Even a pipeline to Greece is under discussion. The main competitor is Russia, but Moscow did not mind yet.
What is the best solution for the people of Israel?
The best solution how to share national natural resources provides Norway, where every citizen benefits from the Brent oil. In order to follow the path, our government needs to be able to attract investors continuously. The target of the government at the moment is simple and modest: to keep the eyes opened to find potential private investors and not to frighten them by the famous Israeli bureaucracy. “The alternative model is that of Russia and Venezuela, notorious for mismanagement, corruption, and failure”, the members of the US-Israeli commission on the Eastern Mediterranean warn the authority.