The discovery of a major Egyptian natural gas field is stoking the political debate in Israel over how to best utilize its own energy resources.
Italian energy company Eni SpA announced Sunday it had discovered the largest gas field ever found in the Mediterranean Sea, off Egypt’s coast. The Zohr Prospect is estimated to hold 30 trillion cubic feet of gas, roughly equivalent to the combined amount in Israel’s two large offshore fields, Tamar and Leviathan.
Israeli Energy Minister Yuval Steinitz cited the Egyptian gas find to criticize opponents of a government plan designed to resolve regulatory disputes over the nation’s gas fields and promote fuel exports. Critics of the planned regulation say it allows energy companies to charge Israeli consumers too much by damping competition; some object to planned exports.
“This is a painful wake-up call about the folly of all the regulators concerning the gas issue,” Steinitz told Israel Radio. Egypt has been able to spur new gas exploration by offering companies a stable regulatory environment, while Israel has been “missing the boat” on developing its own finds.
Tamar was discovered in 2009 and Leviathan, a year later. The expansion of Tamar and the development of Leviathan have been held up amid the regulatory debate. The reserves are controlled by Houston-based Noble Energy Inc. and Israel’s Delek Group Ltd.
News of the Egyptian find sent Israeli energy explorers’ shares plunging in Tel Aviv on Monday. The TA Oil & Gas Index was down 7.4 percent at 12:12 a.m. in Tel Aviv, with Delek Group down 8.4 percent, Delek Drilling LP losing 7.9 percent, and Avner Oil Exploration LP off 6.8 percent.
“It turns out that Egypt does not need our gas,” lawmaker Shelly Yachimovich of the opposition Zionist Union party told Israel Radio. “If this is a real discovery, there will be regional competition and prices will fall, so it is clear we must not allow a decade of draconian contracts,” she said.
Steinitz and Israeli Prime Minister Benjamin Netanyahu are trying to win parliamentary approval for the gas development blueprint. The plan’s opponents say the Egyptian discovery reinforces their arguments against the government’s proposal, including its export aims and the prices it sets for domestic gas sales.
“This doesn’t yet close the door on exports to Egypt,” said Amir Foster, partner at Foster Consultancy Group and adviser to Israeli natural gas companies. “The demand there is something like 25 percent more than what they can currently produce.”