After nine months gathering dust on the desk of Prime Minister Benjamin Netanyahu, the Tzemach Committee report will finally make the short journey down the corridor to the cabinet meeting room. The final date for its discussion has still not officially been set but sources hint that the birth is at hand.
What has happened to the report during those nine months? What has changed? As of this moment it seems that absolutely nothing has changed. The formulation being brought to the cabinet table closely resembles the report that the committee submitted to Netanyahu last September.
The anticipated cabinet discussion comes against the backdrop of the rapidly dwindling patience of Australian company Woodside Petroleum Ltd. (ASX: WPL) that signed an agreement to buy 30% of the rights to the Leviathan field for $1.25 billion cash. Woodside took its decision based on a promise received verbally from Netanyahu about gas exports. The agreement was meant to have been signed in February and as mentioned the patience of the Australians is wearing thin. As reported earlier this month, Woodside has set June 30 as the deadline for completing the deal.
Approving the export of gas is still far off. A range of tough decisions must be made by the cabinet such as how to export the gas, if a large, expensive and dangerous LNG facility should be set up, and if gas should be exported to Turkey or the Far East. At the current pace of decision making and their implementation it could be many years before we see the result of those decisions.
The world does not stand still. At the moment it is in the midst of the most important energy revolution of this century. New technology is being developed in the US for the non-conventional production of oil and gas by fracking at competitive prices. New energy powers are being born overnight and the map of sources and supplies is changing along with global gas prices, which threaten to plunge as new huge supply becomes available.
Market sources, business people and experts like Prof. Eitan Sheshinski warn that, "The window of opportunity for gas exports is about to close." If we don't conclude the long-term gas export agreement now we may lose income of tens of billions of dollars. Israel must choose whether it wants to dive in and join the race, or take a step back and not participate in the game. As of now it looks like the government is choosing a third path, wanting to export gas, and compete on the markets, but it is no rush to get there.
Published by Globes [online], Israel business news - www.globes-online.com - on June 11, 2013
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