Israel reportedly set to ease export quotas of natural gas

An inter-ministerial committee recommends increasing exports from 40% to 52% of total yearly production and imposing no export curbs on fuel from new fields

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

The Leviathan gas field gas processing rig near the city of Caesarea, on January 31, 2019. (Marc Israel Sellem)
The Leviathan gas field gas processing rig near the city of Caesarea, on January 31, 2019. (Marc Israel Sellem)

An inter-ministerial committee in charge of setting out natural gas policies has recommended that Israel increase the amount of fuel it exports to neighboring countries in light of a reduction of local consumption, the Calcalist financial website reported on Monday.

The owners of Israel’s natural gas fields are allowed to export a total of 40 percent of fuel produced per year, some 830 billion cubic meters (BCM), Calcalist said. The recommended change is to increase the export quota to 52% of total annual production, the committee said.

The committee also said that if additional gas fields are found within Israel’s territorial waters, there should be no export quotas imposed at all.

In February, Egypt’s Minister for Petroleum and Mineral Resources Tarek el-Molla visited Israel, the first public visit by a senior Egyptian government official in five years. As part of the visit, the possibility of setting up an underwater pipeline from the Leviathan well to Egypt-based liquified natural gas (LNG) plants was raised, to boost exports to Europe, Calcalist said.

The easing of the quota will lead to additional contracts with Egypt and Jordan, the committee assessed, and will strengthen political ties between Israel and its Arab neighbors, further establishing Israel as a regional energy force.

The committee is made up of members of the Energy, Finance, Justice, Foreign and Environment ministries, the antitrust regulator, the National Economic Council and the Israel National Security Council. In the coming days the committee will publish a draft proposal for public comments, after which a final report will be brought for government approval, Calcalist said.

In October, the Israeli government set an aim of having 30 percent of Israel’s electricity production come from renewable sources by 2030, which will lead to lower natural gas consumption locally. This will enable greater amounts of the fuel to be exported, the committee believes.

The Leviathan field, the nation’s largest, started pumping on December 31, 2019, followed in 2013 by the nearby Tamar, the second largest, which holds some 10 trillion cubic feet (tcf) of natural gas, half of the amount held in Leviathan. Israel has been exporting gas from the Tamar field to Jordan since January 2017, and the Leviathan field started exports to Egypt in January 2020. The Leviathan deals are considered to be bigger and more significant for the economy.

These two fields, along with the smaller Karish and Tanin fields, are seen as a bonanza for a nation that has traditionally been starved of natural resources. They provide a stable source of locally produced energy from four different fields, leading to a more secure supply that is enough to feed all of Israel’s electricity needs for decades, and with the option of exports, pave the way for regional natural gas diplomacy.

In July last year, Chevron Corporation, the multinational energy firm, said it acquired Noble Energy, Inc, a US firm with stakes in both Leviathan and Tamar. Other owners in the fields offshore Israel include Delek Drilling LP, Isramco Negev 2 LP, Ratio Oil Exploration (1992) LP and Greek firm Energean for the Karish and the Tanin fields.

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