Cabinet to lower gas export quota

On Sunday, the cabinet will reduce the amount of gas to be exported from 50% recommended by the Tzemach report to 45%.

Sources inform ''Globes'' that, on Sunday, the cabinet will hold its first meeting on natural gas exports policy and the Tzemach Committee report on the structure of Israel's natural gas industry. In preparation for the cabinet meeting, Prime Minister Benjamin Netanyahu today met Minister of Finance Yair Lapid and Minister Energy and Water Resources Silvan Shalom to try and reach an agreement on gas exports that he will propose to the cabinet. They are expected to reach a deal on the amount of gas that Israel will keep as a strategic reserve for domestic use in the coming decades.

The amount of gas which will be held back will reportedly by 500-525 billion cubic meters (BCM), more than the Tzemach Committee recommendations. This level will reduce the amount of gas which can be exported from gas fields from the 50% recommended by the committee to 40-45%. A source close to the talks said that Shalom wants the higher reserve, while Netanyahu and Lapid support the lower 500 BCM reserve for domestic use.

It looks likely that gas exports will be prohibited from the Tamar field, which will be declared a "strategic reserve" of the State of Israel. Such a decision would sink the initiative to export gas from Tamar via floating LNG tankers.

The Ministry of Energy and Water Resources will write the decision that will be submitted to the cabinet. The decision will likely see strong objections by opponents of gas exports and the Knesset lobby led by head of the opposition Labor Party chairwoman MK Shelly Yachimovich. Hatnua, chaired by Minister of Justice Tzipi Livni also joined a petition signed by 60 MKs which calls on the government to transfer the decision on gas exports to the Knesset.

Minister of Environmental Protection Amir Peretz, a Hatnuva MK, is demanding that 600 BCM of gas be set aside for domestic use, but he does not oppose gas exports in principle. His predecessor, Gilad Erdan, now minister of communications, says that a decision on gas exports should be postponed by several years, until Israel's natural gas reserves are fully known.

Israel's current proven and probable gas reserves are estimated at 850 BCM, and is likely to grow to 900 BCM after the recent Karish discovery, but this amount includes gas fields with low probabilities.

Assuming that a majority of the cabinet approves the decision that Netanyahu and Shalom will submit, the demand to transfer the final decision to the Knesset will likely grow. The government will reportedly not do this unless Deputy Attorney General Avi Licht requires it to do so.

Published by Globes [online], Israel business news - www.globes-online.com - on June 11, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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