Shimon Peres was one of the first on the phone to Delek CEO Yitzhak Tshuva congratulating him as gas from the Tamar field began to make its way to Israel shores.
/By Cellia Shani and Albert Hecht /
Natural gas has now begun flowing to Israel from its massive off-shore gas finds. With future revenues potentially as large as $ 37 billion comes the prospect of both energy independence and economic prosperity for the country.
The initial flows of gas from the first field to enter production, the Tamar field, located in the Mediterranean sea off the coast of Israel, have commenced their journey of nearly 200 miles from the pumping station to the Israeli shore where the gas enters the national gas pipeline, according to a statement issued by the Department of Energy.
Initially gas will flow at below its full potential rate of flow, but within just a few weeks will gradually reach greatly increased levels and fully exploit the capacity of the pipeline.
One well-wisher was former Finance Minister Yuval Steinitz, who led the very public political debate in Israel in order to establish a new framework of regulation for these new energy supplies.
As a direct result there will now be a significant increase in the combination of both taxes and royalties which will accrue to the public welfare from exploiting our new offshore oil and gas reserves, at some cost to the private developers’ share.
It was Steinitz who set up the Tzemach Committee which led to legislation in the Israeli parliament, the Knesset. By law some of the proceeds from gas production will be also diverted into a new Sovereign Wealth Fund to be set up under the joint supervision of the Ministry of Finance and the Bank of Israel.
The new fund will make investments overseas to help sterilize the shekel exchange rate from the rapid, and potentially highly inflationary, inflow of money into the country – described as the “Dutch disease” today by Stanley Fischer Governor of the Bank of Israel, and also to set aside up to 3.75% of the proceeds each year to finance projects in education and society outside of the regular budget frameworks.
As of 2016 revenues are expected to amount potentially to billions of dollars each year. In the wider context, the development of the Tamar and Leviathan gas fields, and of others still under development, may have strategic benefits for Israel’s political relationships with its partners in the world, both near – e.g. Turkey and Cyprus, and far – e.g. India and even China.
The Tamar project off the Israeli coast has alone taken an investment of $ 3.5 billion by its partners to bring to fruition: these include the operator Noble Energy of Texas, at 36%; Isramco, at 28%; and Delek Drilling and Avner Oil and Gas, at 15.62% each – both of which are controlled by the Delek Group of Yitzhaki Tshuva.
The Tamar field is considered one of the most complex and expensive projects developed in the marine gas drilling industry in recent years. The project was completed while meeting established deadlines on time and without exceeding its budget despite a number of unexpected events.