Despite the world of troubles facing Israel, a miraculous resource discovery has come to the land.
President Obama has dissed Israel, the UN is no friend, and the nations surrounded Israel are hostile. It took Moses 40 years to lead the Israelites out of Egypt to the only land in the Middle East without oil—long a source of wry humor. But Israel, at last, has been granted an almost miraculous blessing.
First, in 2009, Israel announced the discovery of a major natural gas field off its coast in the Tamar region. Then at the end of last December, an immense natural gas discovery was confirmed in the Eastern Mediterranean within Israel’s territorial waters. It has the potential for making Israel a major energy exporter over the next decade while providing the country with possibly 200 years of natural gas. This could negate Israel’s plans to buy natural gas from Russia.
Noble Energy, Inc., a Houston-based company, made the discovery. It said drilling tests in its Leviathon field confirmed it was the world’s largest offshore gas find in the past decade and “easily the largest exploration discovery in our history,” said Charles Davidson, CEO of Noble, which has a controlling interest in the field. Leviathon is nearly twice the size of the Tamar field, also off the coast, discovered by Noble and its partners in 2009. The Leviathon discovery confirmed geologic models of the basin and “validates it contains significant natural gas resources,” Noble said. Chairman Gideon Tadmor of a partner company, Delek Drilling, said the field is “the largest gas discovery in deep water in the past decade. The field covers about 125 square miles, a story in Bloomberg News reported. The field could yield as much as 21.1 trillion cubic feet of gas, an independent engineering firm calculated, Energy-pedia news reported March 29.
The natural gas find could be followed by oil beneath the gas. In any case, the increased wealth and energy independence will make Israel considerably less dependent on energy from other nations, even in the short-run. If the gas discovered is turned into LNG (liquid natural gas) potential buyers would include European countries and including Greece and Cyprus. Leviathon is estimated to start producing gas in 2016, with Tamar to start earlier, in 2013.
In a religious framework, it is written in Genesis 49:25, “The Almighty will bless you with blessings of heaven above and blessings of the deep that lies beneath.” It wasn’t to be on dry land, but beneath the sea. Since its founding in 1948, Israel has had to expend 5 percent of its GDP importing practically all of its energy.
The huge discovery may not be totally smooth sailing for Israel, however. The Levant Basin, in which the discovery occurred, is only partly a possession of Israel. The area is shared by Gaza. Lebanon, Cyprus and the Turkish Republic of North Cyprus. Possible disputes about future drilling are quite possible, although there’s no evidence that Israel’s gas find extends into Lebanese territory.
Then there’s the question of royalties and taxes. Israel’s Cabinet approved a sharp boost in the taxes on profits from the recently discovered gas reserves in January. The plan would roughly double the current tax rates. A study committee earlier had recommended keeping the royalty rate at 12.6 percent. But it also proposed a new tax, increasing gradually from 20 percent to 60 percent to bring in about $500 million a year from the Tamar field alone. The current levy is only 30 percent compared with higher rates elsewhere in the world.
Naturally, Noble Energy was not smiling from ear to ear. The gas executives, at first, threatened to sue Israel in an international tribunal. Abraham Sofaer, the Noble representative in Israel, was quoted by the AP as saying: “I don’t need to tell you what a disaster it would be to have two great allies, Israel and the United States disputing with one another in an European Court.” Any retroactive change “would violate the treaty of friendship, commerce and navigation between Israel and the U.S.
Israel’s take from gas is on the low side, because it has been trying to attract investors. Israel is an energy island, with the exception of a pipeline to Egypt. It has relied on imports of coal and gas. The field at Tamar, when it starts producing by 2013, could enhance its energy security for the next decade or more.
Noble launched a nationwide public relations campaign last fall to fight the new proposed levies. Bini Zomer, director of corporate affairs for Noble in Israel, said the campaign emphasizes that Noble is the only International company working in Israel in the field of exploration and supply of gas and oil to energy companies. “It is Noble’s intention to continue to operate in Israel for many more years, and as such we see strategic importance in strengthening and deepening the familiarity of the state’s citizens with the company and its activities.” So said a story in the Jerusalem Post March 29.
With so much at stake, compromise is likely. In any case, modern Israel is indeed blessed by the monumental energy discovery.
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