Second Israeli minister demands guaranteed local gas supplies for 50 years

Jerusalem (Platts)--12Nov2012/850 am EST/1350 GMT

Israel's commerce and industry minister Shalom Simhon wants Israel to guarantee local gas reserves for at least 50 years, or more than double what a government appointed panel recommended, the minister said in a letter to Israeli Prime Minister Benjamin Netanyahu.

In his letter to the prime minister, which was made public on Monday, Simhon called for delaying any decision on the recommendations of the committee headed by Energy and Water Ministry director general Shaul Tsemach until a detailed discussion can be held by the cabinet.

Simhon is the second minister to come up publicly against the committee's recommendations. Environmental Protection Minister Gilad Erdan has also expressed reservations and said no decision should be taken until there is more information on the size of Israel's gas reserves. Israeli energy industry sources said it appears the government is unlikely to decide on the issue before the January 22 general elections.

The commerce and industry minister said the government should approve no more than the export of 350 billion cubic meters of gas at this stage, which would be the minimum amount necessary for justifying the construction of an LNG terminal.
He added that the government-appointed committee underestimated the potential consumption of gas by local industry, which he estimated at 400 Bcm over the next 50 years for such purposes as methanol, ammonia and urea.

The report, issued in late August, recommended allocating 500 Bcm for exports and increased the amount set aside for local demand to 450 Bcm through 2040. The report was seen as good news for gas exploration companies, which have been lobbying for exporting a large part of the gas discovered off Israel's Mediterranean coast.

The volumes for export were substantially larger than those recommended in the preliminary report issued by the committee in April. The report said that as much as 75% of the gas from the Leviathan field could be exported provided that another discovery could meet local demand in the future.

--Neal Sandler, newsdesk@platts.com
--Edited by Jonathan Fox, jonathan_fox@platts.com

 

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