In 2024, record revenues of NIS 2.37 billion were recorded from royalties from natural gas and minerals, 8.2% more than in 2023, when revenues totaled NIS 2.19 billion, according to the annual report of the Royalties, Accounting and Economics Division of the Natural Resources Administration in the Ministry of Energy and Infrastructure.
Since the start of natural gas production in Israel, the state has reaped nearly NIS 30 billion. Of this, NIS 14.9 billion are royalties collected by the Ministry of Energy and Infrastructure, while the remainder is the levy on profits from natural resources and companies tax collected by the Israel Tax Authority.
The local gas partnerships pay several types of taxes to the state on their revenue and gas production. The first is royalties at a rate of 12.5% under the Petroleum Law from the moment production from the reservoir begins. Collection and control of the royalties are the responsibility of the Royalties Division of the Ministry of Energy and Infrastructure, and the funds are transferred directly to the state treasury. The second is companies tax at a rate of 23% of profits under the Income Tax Ordinance, and administered by the Israel Tax Authority. This too is transferred directly to the state treasury. The third is a levy on super-profits from natural resources (known as the "Sheshinski tax") at a rate of 20-46.8%, after a 150% return on investment. This is a special tax set following the report of the committee headed by Prof. Eytan Sheshinski, and administered by the Israel Tax Authority. The revenue from this tax is transferred to the sovereign wealth fund, the "Citizens of Israel Fund," managed by the Bank of Israel.
The Ministry of Energy and Infrastructure’s report for 2024 covers the collection of royalties that go to the state treasury (and not to the Citizens of Israel Fund). Three additional significant statistics emerge from it: an increase of 13.4% in natural gas exports to Egypt and Jordan in 2024; a rise of 8.3% in total natural gas production in comparison with the previous year; and an increase in royalties from natural gas and oil of 10.88% in comparison with the previous year.
NIS 1.37b from Tamar and Leviathan
The bulk of the revenues in 2024 are from natural gas royalties, which amounted to NIS 2.31 billion, 10.88% more than in 2023. Of this, NIS 1.37 billion shekels (59.2%) originates from the export of natural gas from the Tamar and Leviathan platforms and the export of oil from the Karish reservoir. The increase, according to the report, was due to an increase in the production of natural gas from reservoirs in Israel, and an increase in the quantities of natural gas sold for export.
Most of the natural gas royalties, NIS 1,022 billion, come from the Leviathan reservoir, on production of 11.33 BCM of natural gas, which compares with NIS 995 million on production of 11.19 BCM in 2023 - an increase of 2.7% in revenue from Leviathan royalties. Of this, royalties on gas exported amounted to NIS 894 million, or 87.5% of the total.
Royalties from the Tamar reservoir amounted to NIS 779 million, on production of 10.09 BCM and 455,000 barrels of associated condensate. This compares with revenue of NIS 695 million on 9.17 BCM of gas and 421,000 barrels of condensate in 2023 - an increase of approximately 12%.
Total revenues from royalties from the Karish reservoir amounted to NIS 507 million, of which NIS 343 million (67.7%) originated from natural gas production for the local economy, while the rest originated from oil exports.
Fall in phosphate prices hits revenues
The report also shows that there was a decline in the collection of royalties from minerals. In the past year, revenues from minerals royalties totaled NIS 41.2 million (NIS 30 million shekels in current revenues from phosphate royalties; and NIS 11.1 million from audit differences for previous years). This compares with NIS 44.2 million the previous year. Current revenues from mineral royalties fell because of a fall in the price of phosphates, which led to a decrease in the value of raw ore.
In 2024, an application process was held for a natural phosphate rock exploration license in areas designated for mining in the Oron, Tzin, Rotem and Hatrurim fields. The Ministry of Energy and Infrastructure collected NIS 16 million from the winner. In addition, revenues of NIS 5.1 million were recorded in fees from various license granting processes.
"Great news for the Israeli economy"
Minister of Energy and Infrastructure Eli Cohen said in the light of the figures, "The state's income from royalties on natural resources, which continue to rise and stand at more than NIS 2.37 billion annually, is great news for the Israeli economy that will directly affect the citizens of Israel.
"The state's total income from natural gas (royalties, companies tax and levy) will amount to some NIS 5 billion this year, with the expectation that in a few years the state's total income from natural gas will reach about NIS 10 billion annually.
"The significant increase in natural gas exports to Egypt and Jordan shows that the natural gas industry constitutes an important strategic asset for Israel and contributes to strengthening regional stability and security and strengthening our international standing.
"My policy is clear: to exploit the natural gas reserves in Israel. We want to see more companies here in the coming year, more competition, more reserves for the local market, and more possibilities for exporting natural gas."
Published by Globes, Israel business news - en.globes.co.il - on March 5, 2025.
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