Israel Natural Gas Production Begins

Brian Hicks

Written By Brian Hicks

Posted April 12, 2013

Israel has pushed itself one step closer to becoming an energy independent nation.

For nearly a week now, its Tamar reserve in the Mediterranean Sea has been flowing with natural gas, spouting out as much as 300 million cubic feet of natural gas per day, according to Forbes. The reserve is said to hold up to 10 trillion cubic feet in all.

This is just one more part of the energy industry’s evolving geo-political landscape. Israel will now become more self-reliant for its energy needs, and the nation has the opportunity to export its newfound resource to needy countries if so desired.

As the natural gas flows from the sea, it is sent on a 24 hour journey through a pipeline to its terminal in the Israeli port of Ashdod. From there, the gas is harnessed and will be used domestically in the short-term while the Israeli government decides if it wants to export or not.

Where to Go

natural gas boatFrom Ashdod, the gas could be sent anywhere, and that seems to be the pressing issue right now. Should the gas be used primarily in Israel, or should Israel explore options abroad? Eastern and western Europe could be options worth exploring, as well as friendly nations in the Middle East and North Africa.

Russia dominates European energy trade right now. It seems like everything runs through Mother Russia, as it provides about 23 percent of Europe’s natural gas needs. But with the onset of some fresh competition, that reign of dominance could easily shift.

It all depends on how Israel plays its cards. “If it acts correctly, levelheadedly and responsibly, Israel can enjoy not only the benefit of using the gas, but it can also turn into a gas supplier in the Mediterranean region,” Energy and Water Minister Uzi Landau said in a statement, according to Forbes. “The large reserves of natural gas will enable Israel’s citizens to enjoy the benefit of clean and inexpensive electricity, as well as the expected profits for the state.”

Russia sees this potential and most likely will do what it takes to maintain its symbol of power. The nation might gladly take Israel’s gas off its hands and partner up to distribute the natural gas through its existing trade lines.

You also have to factor in the U.S., which is seriously contemplating the shipment of its own natural gas. It could easily become a new supplier to Europe, and some believe that decision could come a lot sooner rather than later.

Good and Bad

If Israel did decide to keep its natural gas for domestic use, the Tamar reserve would supply 50 to 80 percent of its needs over the next ten years, The New York Times reports.

Israel has been steadily turning more to the use of natural gas. In the recent past, the percent of electricity generated by natural gas rose to 40 percent, and that’s before the resource was discovered off its coast. Consumption is expected to rise to 50 percent by 2015, the New York Times reports.

Israel hopes natural gas will bring more than just self-sufficient energy to the nation. In 2011, the government stated it would tax its energy profits between 52 and 62 percent. And from that, the education system and national security would receive funding.

The more the nation produces, the more funding it will receive.

Having an overabundance of natural gas is unquestionably a great economic asset, but relying on suppliers and importing when the resources are at your doorstep takes power and freedoms away.

Israel knows this all too well. In 2011, Israel directly felt the ramifications when Egypt ousted their then President, Hosni Mubarak. The pipeline that was supplying Israel with nearly 40 percent of its natural gas needs was disrupted in protests, and a pipeline in the Egyptian Sinai was attacked and bombed over a dozen times.

That’s 40 percent of a country’s power needs up in smoke at the blink of an eye. At the very least, this could cause a delay in power.

While Israel stands to build a lot of lasting friendships with its recent natural gas production if it does choose to export, it isn’t all peachy. It can create problems, too, and there is a lot of money at stake.

Israel and Lebanon are in a dispute right now over further exploration in the Mediterranean Sea, where maritime borders are unclear. Each nation is claiming the potentially rich area as its own.

Friendships can be formed—after all, natural gas is the hottest thing in the scope of energy right now—but that same blessing can create a rift between nations. The border claims between Lebanon and Israel, for example, could have ramifications moving well into the future.


What is certain is that the Tamar reserve belongs to Israel, and the nation is taking full advantage of it at the onset. Texas-based oil company Noble Energy (NYSE: NBL) is diligently working to commercialize its efforts, working with the Israeli government and business.

In 2009, Noble made an initial investment in the Tamar reserve of $3 billion, according to Forbes, and formed partnerships with Delek Energy and Dor Gas Explorations to carry out drilling operations in the region.

Noble Energy is lucky enough to be in the right place at the right time. The partnership with Israel has proven to be a good one so far, and other investors have a keen eye on Israel now. Natural gas will not only bring cleaner air to Israelis, but it most likely will cement a place for them in the global energy community.

This is especially true due to the more recent discovery of yet another natural gas reserve—the Leviathan—said to be one of the largest offshore gas finds in a decade. Experts think it may hold up to 16 trillion cubic feet of natural gas, according to Forbes, which would supply Israel and its neighbors for the next 100 years. Production is set to start in that region by 2017.

Noble is working with Australian oil company Woodside Petroleum (ASX: WPL), to begin operating in that region, and French oil company Total (NYSE: TOT) is also vying for a spot in the Leviathan reserve.

No matter who is granted access to Israel’s offshore natural gas reserves, the nation may have a solid standing as an energy power many years into the future; it just has to figure out what to do with all the resources.


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