Israel plans to be powered by natural gas
Petroleum Economist: Israel's top energy official has confirmed that the government is committed to natural gas becoming the primary source of energy in the years ahead.
Energy minister Yuval Steinitz told an international energy and business convention in Tel Aviv on 19 November that the use of coal will end by 2030, with a power-generation fuel basket based on 83pc gas and 17pc renewables taking its place. This represents a major shift from current levels—in 2017 power generation comprised 64.1pc gas, 32.5pc coal and 3.5pc renewables.
The transportation sector, the minister added, would run entirely on gas. By 2030, compressed natural gas (CNG) will fuel heavy duty trucks and electric cars will use energy generated by natural gas.
Ron Adam, the special envoy for energy at the Israeli foreign affairs ministry and Yossi Abu, the CEO of Delek Drilling, each provided updates on various aspects of gas export projects that are underway.
Abu noted that exports to Jordan's NEPCO will commence as soon as the vast offshore Leviathan field is operational in Q4 2019. Construction of an Israeli gas transmission system in the north to the border with Jordan is due to be completed by May 2019, while Jordan is progressing at a similar pace with its own north-to-south grid.
He added that exports to a private company in Egypt, albeit at relatively small quantities at first from the Tamar field, will start around the same time, via the 89km (55-mile) East Mediterranean Gas (EMG) pipeline that connects Ashkelon in Israel to el-Arish in Egypt.
Export volumes to Egypt will increase gradually once Leviathan comes on line and after the final export routes have been decided. These routes could include one or more options to export up to 7bn cm/y of Israeli gas to Egypt.
Firstly, the parties could use the Israeli transmission system to export via the EMG line; circumvent the Israeli system (and thus avoid the transmission tariff and the congested lines in the south of Israel) by hot-tapping from the Tamar and/or Leviathan offshore lines for a direct connection to EMG.
There is also the option of using the Israeli transmission system in the north to export via the Jordanian grid and into the Pan-Arab pipeline via Aqaba in Jordan and up to el-Arish in Egypt.
Finally, there is potential to connect the Israeli Leviathan field together with the Cypriot Aphrodite field, via a direct 400km offshore pipeline to be constructed directly to the Idku LNG export facilities.
Another export option, discussed by energy envoy Adam, was one that is being promoted by IGI Poseidon, a 50-50pc joint venture between Depa and Edison that is about to commence a detailed FEED study at a cost of €70mn ($79mn), to look at the technical and commercial feasibility of exporting Israeli and Cypriot gas to the one global market where imports are increasing steadily, the EU.
The CEO of Poseidon, Matteo Restelli, explained at the convention that the pre-FEED study had been successful and that the EU is to provide a further €34mn, as many of its member states are keen to diversify their sources and routes of gas supplies.
While Israel is clearly making progress in developing and expanding its gas sector, issues are still hindering its development. For instance on exploration, the government could cancel any obligation for new fields in the next licensing round to connect and/or supply gas to the local market. It could also fund a feasibility study for a floating LNG project to open other potential export options.
As the coal-to-gas conversion process should be completed before 2030, once Leviathan is on line, a petrochemical sector could be established away from the limited land available on the coast and as far south as the Negev desert. On infrastructure, the government could invest in both gas transmission and distribution networks that still suffer from bottlenecks and are impeding greater consumption, and gas storage facilities.
Finally, Israel could also reach a unitisation agreement with Cyprus, a border agreement with Lebanon and become a signatory to international treaties such as the energy charter.
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