Natural gas, mining brought state NIS 480m in royalties in 1st half of 2020
While royalties — mainly paid by natural gas companies — are up 12.7% compared with last year, Tamar well’s production down nearly 40%, Energy Ministry report shows
Sue Surkes is The Times of Israel's environment reporter
Royalties paid by companies extracting natural resources, such as gas and minerals, came to around NIS 480 million ($142.5 million) during the first half of 2020, an increase of 12.7 percent compared with the same period last year.
Almost all of it came from the natural gas fields Tamar and Leviathan, operated by Texas-based Noble Energy, an annual report (in Hebrew) released Monday by the Energy Ministry’s Natural Resources Administration shows.
Tamar produced 3.4 billion cubic meters (BCM) of gas, down nearly 40% from the same period in 2019. The drop was due to falling gas prices, lower demand during the coronavirus crisis, and the Israel Electric Corporation’s decision to buy more gas from the Leviathan well. Tamar paid NIS 249 million ($74 million) in royalties.
Leviathan, which began commercial production in January, paid NIS 223 million ($66.2 million) on production of 3.1 BCM. Nearly 60% of this was supplied to the Israeli market — mainly the IEC — with the rest going to Egypt and Jordan.
Mining by the Rotem Amfert Negev company, which produced just under three million tons of phosphate, brought in NIS 4.565 million ($1.35 million). The company, owned by Israel Chemicals Ltd., has plants at Rotem, Oron and Zin in southern Israel.
At the Rotem site, the company extracts oil shale to feed a power plant. In February, the Energy Ministry announced that it would not be renewing the oil shale license beyond May 2021.
Royalties from Dead Sea mining carried out by another Israel Chemicals Ltd. company, Dead Sea Works, are administered by the Finance Ministry and are therefore not included in this report.
Royalties are supposed to contribute to an overall “government take” of 62% on the profits companies earn from natural resources, which belong to all of the country’s citizens. The second source is corporate taxes, collected by the Tax Authority, and the third — which has been delayed — is supposed to come from levies paid into a sovereign wealth fund.
The sovereign wealth fund, which has not been set up yet, can only begin to operate once at least NIS 1 billion ($291 million) has been levied. The sum raised to date is NIS 474 million ($138.8 million). Some 75% of it was paid in 2013 for the Mari-B Yam Tethys gas field, which closed in 2012, with the rest coming from Israel Chemicals Ltd.
Israel Chemicals is stuck in a complex dispute with the tax authority over Dead Sea Works tax writeoffs connected to some NIS 500 million ($145 million) that the latter says it should already pay into the sovereign wealth fund.
