Israel won’t force Chevron out of Tamar or Leviathan
The long-awaited Dayan Committee report calls for regulatory stability, a 515 BCM domestic reserve requirement and incentives for developing smaller gas discoveries.
More than two and a half years after its establishment, and just a month and a half before the Knesset elections, the inter-ministerial committee tasked with examining natural gas policy and strengthening energy security, led by Energy Ministry Director-General Yossi Dayan, has published its final recommendations.
The committee’s report confirms a Calcalist scoop from about six weeks ago: it will not recommend forcing American energy giant Chevron to sell its stake in either the Tamar or Leviathan reservoirs, a move that the Ministry of Finance and the Competition Authority had demanded in an effort to increase competition in Israel’s natural gas market.
Energy Minister Eli Cohen told reporters that the committee’s decision not to intervene in the existing ownership structure of the two major gas reservoirs was intended to preserve regulatory stability. Any upheaval in the sector, he said, could deter or drive away new investors. According to committee chairman Dayan, “Such a decision signals to the world that Israel is a regulatorily stable country that is attractive for investment; this stability will encourage further exploration, which has the potential to increase our gas reserves.”
On the question of preserving gas reserves to meet the Israeli economy’s needs in the coming years, the committee opted for a conservative approach. According to current data, Israel’s proven natural gas reserves stand at approximately 870 billion cubic meters (BCM), while professional estimates indicate an additional unproven potential of more than 1,000 BCM within Israel’s Exclusive Economic Zone. The committee estimates that cumulative demand for natural gas in the Israeli economy through 2048 will reach approximately 515 BCM and recommends raising the mandatory reserve requirement to that level, up from the previous 440 BCM requirement.
The committee assumes that, provided sufficient gas is secured to meet domestic needs through 2048, gas partnerships will be able to continue exporting, alongside state initiatives to encourage further exploration in the coming years and expand reserves. It also recommends that if new reservoirs are discovered, the supply obligation to the Israeli economy should be increased accordingly, beyond the 515 BCM threshold.
Having become a natural gas exporter over the past decade, primarily to neighboring Egypt and Jordan, Israel is now being advised by the Dayan-led committee to prepare for the post-natural-gas era and formulate a national plan to diversify its energy sources. This should include examining the establishment of infrastructure for gas imports and storage, while treating natural gas as a finite resource.
While industry experts consider the likelihood of finding massive new discoveries in Israel’s economic waters on the scale of Leviathan to be low, they estimate that future discoveries are more likely to be significantly smaller, in the range of approximately 50 BCM. Consequently, the Dayan committee recommends significant regulatory relief for reservoirs smaller than 50 BCM, with the obligation to supply the Israeli market limited to just 15% of their total volume. The aim is to make the development of smaller discoveries economically viable.
Last week, the Ministry of Energy held a “roadshow” in the U.S. to unveil the fifth natural gas exploration round, under which five exploration licenses will be awarded to companies participating in the tender. The tender results are expected to be announced in about eight months. According to Energy Minister Cohen, “Our goal is to bring major international companies like Chevron here in a way that fosters competition, expands reserves, and maintains attractive electricity prices in Israel.”
Cohen also addressed the country’s data center crisis, following the Public Utility Authority’s decision last July to halt new grid connections because of an exceptional volume of requests totaling 27 gigawatts. According to Cohen, “About 20% of all electricity generated in Israel will be allocated to the data center sector, and as early as next month, the Public Utility Authority will launch a hearing process regarding the allocation of 1 to 2 gigawatts.”
