Policy and Government Decisions

Following the discovery of the giant Tamar and Leviathan gas fields offshore, the Ministry of Energy and the Government of Israel adopted several policy measures and decisions to promote the exploitation of the discovered resources and the exploration for additional gas and oil fields.

 

The Tzemach committee

In 2012-2013, an inter-ministerial committee (The Tzemach committee) formulated a government policy on the natural gas sector in Israel, particularly with regard to the export of natural gas. The committee's main recommendations were to preserve sufficient amount of natural gas for the expected domestic consumption of the next 25 years, as well as the obligation to connect any discovered gas fields to the domestic market. The committee also recommended setting a minimal quantity of natural gas to be supplied to the domestic market from each field, according to its size. The Tzemach committee's recommendations were designed to be reviewed after five years, and indeed, in 2018, an inter-ministerial team re-examined these recommendations. The interim recommendations of the 2018 inter-ministerial team include recommendations to ease the obligation to connect gas fields to the domestic market; to reduce the amount of gas to be supplied to the domestic market from each field; and to take additional measures to incentivize petroleum exploration and production activity offshore.

The final recommendations of the 2018 inter-ministerial team are expected to be published in December 2018.

 

The Gas Framework

In the 2015 and 2016, the Government of Israel adopted two government decisions (number 476, and 1465) known together as the Gas Framework. These decisions were taken in order to promote competition in the gas sector; development of discovered fields; and to create a business friendly environment for new investors.

 

Incentivizing Small and Medium Size Fields

In 2017 the Government adopted another decision (number 2592) promoting the development of small and medium size fields. The Government committed to participate in the construction of an offshore gas pipeline system, which will facilitate the connection to the shore. The government owned Israel Natural Gas Lines Co. will establish and operate this pipeline system designed for small and medium fields.

 

Government measures to increase demand for natural gas

In the beginning of 2018, the Minister of Energy announced the Energy Economy Objectives for the Year 2030. These objectives include a reduction in the use of polluting fossil fuels, specifically, terminating the use of coal and significantly reduce the use of distillate fuels, whilst maintaining the reliability and continuity of energy supply.

 

These objectives include several elements, which effect the domestic consumption of natural gas, among them:

·         By the year 2030, terminating use of coal in electricity production in all coal-fired power plants and a transition to electricity production using natural gas.

·         Based on the expected integration of electric vehicles in world markets, while continuing current technological and economic improvements in the battery field, the objective for the year 2030 is that 100% of new private vehicles sold in Israel will be electric. Moreover, a large portion of the heavy transport vehicles will be compressed natural gas (CNG) and electric vehicles.

·         Governmental investment of about USD 175 million for expansion of the gas distribution system.

The Energy Economy Objectives for the Year 2030 document has been published at the Ministry website October 2018.

A convenient translation of the Energy Economy Objectives for the Year 2030 executive summery into English can be found in this link.

Earlier this year, the Israeli Government adopted decision (No. 4080 as of 29.7.2018) which instructed the Minister of Energy to act for Cessation of operations of 4 coal-based power stations no later than June 2022, and subject to the connection of three natural gas fields to the national natural gas transmission system with a separate infrastructure, and the establishment and operation of an alternative natural gas-based power station.

A convenient translation of Government decision no. 4080 into English can be found in this link.


Relevant files:

1. Petroleum Profits Taxation Law, 5771-2011. of 28.2.2011.

4. Encouragement of Small and Medium Fields and Declaration of an of Emergency in the Natural Gas Market. Government Decision 2592 dated 2.4.2017.

5. Cessation of operations of power generation units 1 – 4 at the “Orot Rabin” power station. Government Decision 4080 dated 29.7.2018.

​6. Energy Economy Objectives for 2030.