Steinitz: Foreign investments in gas will be strongest ‘growth engine’ for Israeli economy

Hydrocarbon exports are ‘golden opportunity’ to bolster ‘axis of peace’ of Israel, Egypt and Jordan, energy minister says

Jerusalem Post Diplomatic Conference Yuval Steinitz
The country’s natural gas sector has the potential to attract some $20 billion of foreign investment in the next few years, reversing a trend that has resulted in a multiyear economic slowdown, National Infrastructure, Energy and Water Minister Yuval Steinitz declared on Wednesday.
“This is also the most immediate and effective economic growth engine,” Steinitz said at The Jerusalem Post Diplomatic Conference in the capital .
Therefore, he said, “it would be extremely irresponsible, and even stupid, to continue to delay the gas framework.”
JPost Diplomatic Conference: Exploring Israel"s gas market
Steinitz was referring to the long-disputed natural gas compromise outline, the result of nearly eight months of negotiations among government officials and the most prominent hydrocarbon firms – the Delek Group and Noble Energy – operating in Israel’s eastern Mediterranean waters.
While the agreement received required government authorization in August and Knesset approval in September, activating the outline still requires the economy minister to invoke a legal clause to circumvent the objections of the antitrust commissioner.
Following former economy minister Arye Deri’s resignation from his position two weeks ago, it is now Prime Minister Benjamin Netanyahu’s responsibility as economy minister to consult with the Knesset Economic Affairs Committee prior to implementing that clause, known as Article 52.
In addition to earning the disapproval of the antitrust commissioner, the outline has faced staunch objections from the Knesset opposition politicians as well as members of the public, who argue that the document does not foster ample competition or provide sufficiently for Israeli citizens.
Among the terms of the outline are requirements that Delek Group and Noble Energy sell their two smaller reservoirs Karish and Tanin, with Delek completely exiting the Tamar basin and Noble diluting its assets there. The document also establishes some pricing schemes – which opponents deem far too weak – and includes clauses for ensuring stability in the sector.
At both the Universal Oil & Gas Conference in Tel Aviv on Tuesday and The Jerusalem Post Diplomatic Conference on Wednesday, Steinitz expressed his hopes that Netanyahu’s consultations with the Economic Affairs Committee would conclude by mid-December, enabling the deal to move forward.
“In my first days in office, I made it clear that my first priority is to establish a unified government policy to establish the gas roadmap,” Steinitz said at the Jerusalem Post conference.
During an interview with Netanyahu later at the conference, the prime minister likewise voiced his support for moving the gas sector forward.
“Contrary to protests, within a year or two, people are going to say, how could we not do this?” Netanyahu said. “This will be tremendous for the Israeli people.”
Implementing the outline, Steinitz explained, will not only enable the development of Leviathan, Karish and Tanin, but also will also allow for further explorations.
The energy minister said he is working to reopen Israel’s sea for such exploration in the first half of 2016.
In a panel discussion at the conference, Noble Energy’s Israel country manager, Bini Zomer, said his company expects that the Leviathan reservoir will be up and running by 2019-2020. Activation of the outline will enable the firm to invest some $6 billion to $8b. in infrastructure in Israel over the next three to four years, he added.
Moving forward with the gas deal, and generating competition through the sale of Karish and Tanin, will demonstrate “that Israel is open for business” and encourage new companies to come invest in the country, Zomer said.
“Noble Energy has been here since 1998,” he continued. “We are going to be here several decades into the future, developing in partnership with the government of Israel, Israel’s natural gas fields and resources.
We will benefit from that, the citizens of Israel will benefit from that and the region will benefit from that.”
Yossi Rosen, chairman of the Israeli Institute of Energy and Environment, also touted the economic benefits of advancing the sector, arguing that increased gas flow will lead to natural reductions in prices, among other advantages.
“This gas is essential for our economy, for our environment, for our political relations and, not least, it will create more investment in Israel,” Rosen said. “We can’t send away the investment by our regulation.”
Alexander Varshavsky, commissioner of the Energy Ministry’s Natural Gas Authority, similarly described Israel’s gas reservoirs as “a game-changer for the Israeli economy,” saying implementation of the gas outline will “give a green light” to both development of the industry at home and for potential regional export agreements.
One potential export outlet is Egypt, a country that recently made headlines with the discovery of the large Zohr reservoir in its waters.
Despite Egypt’s own find, however, Steinitz expressed confidence that it will still need much more gas, as will Turkey.
He also discussed the possibility of working together with Egypt and Cyprus, neighbors who have discovered gas in the Mediterranean Sea, saying that, as a whole, the basin could be a major gas-supply source for the European Union.
“There are probably some more Leviathans or Tamars, or Zohrs in Egypt, to be found in the eastern Mediterranean basin – by this I mean the economic waters of Israel, Cyprus and Egypt – in the next five years,” he said.
The continued development, and potential export, of Israeli gas also provides the opportunity to improve diplomatic ties with Egypt and Jordan in particular, Steinitz added.
“Now we have a golden opportunity, for the first time, to create something significant in the axis of peace of Israel, Egypt and Jordan,” Steinitz he said.