"Gas market development unprecedented"

Minister Uzi Landau: The gas fields were found by foreign professionals, and we want them to come and look for oil and gas here.

"There is huge uncertainty in oil price forecasts. The likeliest scenario talks about $150-200 a barrel within 20-25 years. There is also a scenario of a price of over $200 a barrel in 2020," Eco Energy Ltd. CEO Dr. Amit Mor at the opening of the Israel Energy and Business Conference 2010 in Kfar Hamaccabiah in Ramat Gan today.

Mor said that there was also huge uncertainty on both the demand and supply sides. "A US Department of Energy scenario predicts a 40% increase in energy consumption over the next 20 years. An embargo on Iranian oil exports and imports of refined oil products into Iran will be effective. The current sanctions do not tickle them. The world is not determined enough. An embargo will cause them a economic severe crisis, very quickly. The price of oil might briefly jump to $150 a barrel, maybe for a week or two, but prices will quickly plummet. But there is no political will by the world's leaders."

As for the development of Israel's natural gas market, Mor said that, despite delays, the share of natural gas in the Israel Electric Corporation (IEC) (TASE: ELEC.B22) fuel basket rose quite quickly. He said that demand would reach 6-12 billion cubic meters within ten years.

"It's critical to ensure back-up in the event that natural gas does not reach the systems for some reason or other. There is no precedent in the world for such rapid development of a natural gas market. Liquefied natural gas (LNG) tankers are popping up around the world like mushrooms after the rain. The economy needs back-up and it is critical that we have LNG tankers here."

Minister of National Infrastructures Uzi Landau reiterated his warning against an electricity shortage within 2.5 years; in other words a severe shortfall in electricity production infrastructures, resulting in demand outstripping supply.

"We are liable to face an electricity drought with 2.5-3 years," said Landau. "IEC's financial condition will not allow it to make progress."

As for Israel's offshore gas discoveries, Landau said, "At Leviathan, 50% is still on the tree. It is necessary to wait patiently and see how much there is. Meanwhile, there is nothing. If gas is also found at Leviathan, we'll have a huge advantage here."

On the issue of state royalties on gas discoveries and the work of the Sheshinski committee, Landau said that Israel must not drive away foreign investors. He expressed the hope that the committee would come up with "good recommendations." He said, "The gas fields were found by foreign professionals, and we want them to come and look for oil and gas here. The Sheshinski committee has a very wide range of considerations, and I hope that it will come up with good recommendations. The public's honor has its place, but Israel must continue to be attractive. We must let entrepreneurs invest and profit, otherwise they go elsewhere."

Published by Globes [online], Israel business news - www.globes-online.com - on October 18, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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