Israel has finally announced its intentions for its vast reserves of natural gas yesterday. The tiny country has been sitting on outsized reserves of offshore gas for years, but until yesterday had been vague about what it would do with this resource windfall. Israel will keep 60 percent of the gas for domestic use—enough, reportedly, to meet the country’s gas needs for at least the next two decades—and export the rest. If current predictions hold, the country stands to make a profit of $60 billion from these exports. The FT reports:
Analysts say that Israel’s Mediterranean gas finds, among the largest of their kind in the world in recent years, have the potential to boost the economy for years to come and could transform the Middle East’s energy map….[Prime Minister Benjamin Netanyahu’s] government said the decision “balances the need to ensure a source of available and affordable energy for the citizens of Israel and the need to export gas from which the state will generate profits to be invested in the welfare and safety of citizens.”
It says something about the size of the newly discovered reserves that they can meet all of Israel’s domestic gas needs and still have a such a bounty to export. But exporting won’t be an easy task. Israel can choose to liquify its gas and export it by ship, but this process is expensive and adds a lot to the cost of the gas. The other option is to ship the gas by pipeline, likely travelling to and through Turkey. But Israeli-Turkish relations are frosty, and though cheap energy might warm things up a bit, some big sticking points remain.Still, figuring out the logistics of exactly how to bring one’s resource bounty to market is the kind of problem many world leaders would love to have.