The Economic Miracle of Israel's Natural Gas Fields
Monday, September 29, 2014 | Tsvi Sadan ISRAEL TODAY
Thirty years ago I visited an oil rig at Atlit, a town on the Mediterranean shore just south of Haifa. It had been erected by an American Christian company whose CEO, citing a peculiar interpretation of a biblical promise to the Tribe of Asher (Deut. 33:24), was certain he’d find huge quantities of oil beneath the western border of that tribes ancient territory.
The company ended up losing millions of dollars. But just 15 years later, Israel discovered vast natural gas fields a mere 50 miles west of Atlit in the depths of the Mediterranean, suggesting that these Christian dreamers weren’t terribly off the mark by believing God would bless Israel with significant amounts of fossil fuels.
[Editor’s Note: The Christian company referenced above is Zion Oil & Gas, which continues to search for oil in Israel, and was featured in the October issue of Israel Today Magazine, which is available for free to our newsletter subscribers. SIGN UP TODAY to read it >>]
Thirty-five trillion cubic feet of gas worth some USD $500 billion has been found in Israel’s “economic waters,” with the Leviathan field being by far the largest. To give some kind of reference point, Israel’s national expenditures for 2013 totaled USD $114 billion.
More importantly than covering the national budget is the fact that, for the first time in history, Israel has the opportunity to become energy-independent, as well as a major exporter of natural gas.
Theoretically, these natural gas reserves have the potential to transform Israel’s economy. Indeed, experts say that this gas alone can shave 25 percent off Israel’s annual national budget for the next 25 years.
A find of such epic proportions should elicit great excitement. Instead, it is buried beneath political apprehension and narrow financial interests.
Ever since the Leviathan discovery, Turkey and Lebanon have challenged Israel’s right to the reserves. Threats emanating from both countries have forced Israel to spend upwards of USD $1.3 billion to secure its claims. This diplomatic tension could be one reason the Israeli government has curbed its enthusiasm over the find.
Additionally, the narrow financial interests of private companies have stymied lively public discussions over this newfound national treasure in favor of hushed corporate dealings.
Reluctant as Jerusalem may be to publicly discuss the off-shore gas fields, and even as the companies involved shovel off as much of the profits as possible, the fact is that Israel is already benefiting from this recent discovery.
Since 2010, Israel’s major electric plants, which until recently operated almost exclusively on dirty imported coal, have been transitioning to natural gas. By 2040, it is estimated that 70 percent of Israel’s electricity will be gas-generated.
In addition to this clear economic and environmental advantage, Israeli gas will enable the Jewish state to switch from being energy-dependent to being an energy provider. Israel has already signed a USD $15 billion gas contract with neighboring Jordan, and other countries in the region and further abroad will certainly become customers in the near future.
Though the handling of this important national resource remains a matter of concern for many Israelis who feel that simple taxation on profits is inadequate, there is still hope that most of the gas and its revenues will be used for the direct benefit of Israel’s citizens, many of whom are struggling financially.
If handled properly, this gas can turn out to be a blessing from heaven.
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