Gas for Israel
Patrick CrowMany Middle Eastern nations have been fortunate enough to find oil and gas under their deserts, but not Israel.
Washington, D.C.
[email protected]
But Israel is intent on shifting its large industries from fuel oil to gas and wants to take Israeli gas consumption from zero to 4 billion cu m/year by 2005.
State-owned Israel Electric Corp. (IEC) plans to convert its oil-burning power plants at Ashdod, Tel Aviv, and Haifa to burn 2 billion cu m/year of gas. Initial industrial demand is about 500 million cu m/year but would grow to 2 billion cu m/year by 2005 as cement works in southern Israel are converted to gas.
The government plans to authorize a monopoly company to build and operate a $200 million gas distribution firm, to be called Israel Gas Co. The winning consortium of companies will be named later this year, and gas suppliers may own up to 40% of the consortium.
Liquefied natural gas imports would begin in 2001, but the source is not yet determined. IEC has held talks with suppliers from Russia, Nigeria, and Norway, among others. The government has said it needs to find a supplier by September.
Egyptian option
Israel's most obvious supplier would be its neighbor Egypt, which has ample supplies for export.For most of 1996, Israel and Egypt discussed building a "Peace Pipeline," which also would have supplied a power plant in the Palestinian-controlled Gaza Strip. The line could have been extended to Syria and Turkey.
The stalemate in the Arab-Israeli peace process put the project in limbo, although it also faced serious gas price problems.
While Egypt's reserves have mushroomed over the last 5 years, Egyptian General Petroleum Corp. has been unwilling to sell gas below fuel oil parity because gas burned at domestic power stations frees fuel oil for export.
Israel argued that pricing gas at fuel oil parity at the border with Egypt would not warrant its investment in a gas distribution infrastructure.
Israel's best option now appears to be importing LNG at a terminal on the Mediterranean coast between Haifa and Tel Aviv. The terminal would be built in shallow waters out in the sea because of the scarcity of land and the lengthy approval process needed for any onshore site.
LNG supplies could come from Algeria or Qatar but appear more likely from non-Arab sources such as Nigeria or Norway.
Sinai supplies
In May, BG International urged Israel to consider a cheaper option for Egyptian gas imports.The unit of BG plc wants to sell Israel gas from fields it plans to develop off Egypt's Sinai coast. It said reserves would be sufficient to cover all of Israel's needs.
BG is part of the Israel's consortium MEE, which would build and operate a pipeline from the offshore fields to Israel's border. It promised to provide the Israel's government assurances that supplies would not be interrupted.
MEE is among five groups that submitted offers in the pre-qualification round in March to build and operate an Israel's gas distribution network.
The practical problems of Egypt supplying Israel appear to be solvable. The political problems are another matter.
Copyright 1998 Oil & Gas Journal. All Rights Reserved.