Energy exploration over the past several years uncovered significant natural gas resources in Israel, primarily in the country's offshore areas.
Israel exports small quantities of refined products, but with domestic production being virtually nonexistent, imported oil meets nearly 99 percent of total oil demand, and over 80 percent of those imports are crude oil. Israeli exports of refined products grew from approximately 66,000 bbl/d in 2000 to 84,000 bbl/d in 2010, with residual and distillate fuel oil accounting for approximately half of exports over that period.
While not currently a significant oil producer, Israel is the eastern Mediterranean's largest consumer of petroleum. Total Israeli oil consumption averaged 246,000 bbl/d from 2000-2011, ranging from a low of 233,000 bbl/d in 2005 to a high of 263,000 bbl/d in 2011. In addition, Israel was the region's second-largest natural gas consumer in 2011, the last year for which EIA data are available. Unlike Israel's petroleum consumption—which Israel meets with imports—much of the natural gas consumed in Israel over the last decade came from domestic sources. Israel wants to increase the utilization of natural gas across all end-use sectors.
Historically Israel has been an importer of natural gas; most recently through the Arish-Ashkelon pipeline from Egypt and a very small portion through a newly installed floating and regasification terminal. The discoveries of the Tamar and Leviathan fields (among several others) should allow the country to become a significant exporter of natural gas in the next decade. There are competing proposals to develop pipelines and LNG infrastructure to support natural gas exports, but deliberations about how Israel will get its natural gas to market are ongoing.
Largely as a result of poor regional relations, Israel does not share any international oil pipelines with its neighbors. In 2012, the majority of Israel's crude oil imports came from Russia and Azerbaijan via tanker vessels. Israel plans to reduce its dependence on oil imports through an expansion of its rapidly-growing natural gas sector.
A significant portion of Israel's natural gas over the past several years has come from neighboring Egypt, but Egypt suspended supply in the aftermath of unrest beginning in 2011. The el-Arish-Ashlekon pipeline (Egypt-Israel) met up to 40 percent of Israel's demand prior to its closure, but with additional volumes from Israel's offshore fields becoming available in early 2013, the country no longer requires Egyptian supply.
In early 2013, Israel began receiving LNG cargoes on a short-term contract (two loads per month) in order to bridge the gap created by the loss of Egyptian volumes, the swift decline in production of the Mari-B field, and the start-up of the Tamar field in April 2013. The contract could deliver between 50 and 70 Bcf per year to Israel, but delivered volumes hinge on how quickly operators can bring the Tamar field up to peak capacity.
In January 2014, the Oil & Gas Journal estimated Israel's proved reserves of oil at 11.5 million barrels and its proved reserves of natural gas at 10.1 trillion cubic feet (Tcf). While neither figure places Israel in the top-40 globally, these totals are significantly higher than they were a few years ago.
The European Union announced that they would be in support of a feasability study for shipping Israeli oil and natural gas through Greek waters to Europe. On December 9, 2014, representatives from the European Union signalled their interest in a "EastMed Pipeline," claiming that "It could play an important role in diversifying our resources." The feasability study is necessary because the route that the pipeline may need to take is through extremely deep waters between Cyprus and the Greek island of Crete. Israel and Greece have been pushing for this pipeline to be built since the discovery of large Israeli oil and natural gas fields in the Mediterranean Sea during 2009 and 2010.
It was announced in early May 2016 that the Hatrurim oil and gas exploration license in the Dead Sea had uncovered an oil reservoir containing 7-11 million barrels of oil. The Hatrurim license area covers 94 square kilometers in the Dead Sea region, and the initial exploratory drilling was carried out in 1995. The firm Israel Opportunity Energy Resources LP was awarded 25% of the Hatrurim license.
The Israeli Ministry of National Infrastructures, Energy and Water Resources reported record revenue from oil and gas fees and royalties in August 2016. Oil and natural gas sales royalties as well as oil production royalties and other various fees and activities, provided NIS 411 million in revenue for the Israeli government during the first half of the year; an increase of 12.8% over the previous period's numbers.
Israeli Energy Minister Yuval Steinitz stated in February 2017 that over the previous year, Israel earned 3 billion Shekels ($800 million) exporting natural gas.
Israel began covertly supplying natural gas to Jordanian state-owned companies Arab Potash and Jordan Bromine in January 2017. The natural gas is technically being sold to Jordan through a third-party American company, NBL: Eastern Mediterranean Marketing.
In February 2018, U.S.-based Noble Energy Inc and Israeli Delek Drilling LP announced $15 billion worth of deals to sell natural gas from the Leviathan and Tamar fields to Egypt over the subsequent 10 years. Noble, Delek, and their other partners in Leviathan and Tamar signed two agreements with Egypt's Dolphinus Holdings to sell the country 64 billion cubic meters total of natural gas.
Greece's Energean Oil & Gas signed a $1.27 billion deal with Morgan Stanley and other banks in March 2018, to finance the development of Israel's Karish and Tanin fields. The two unexplored fields hold an estimated 2.4 trillion cubic feet of contingent gas, with an equal amount of potential reserves. In order to raise more funds for the development of these fields, Energean listed on the London Stock Exchange on March 16, 2018. Energean offered 72.6 million new shares at 4.55 pounds ($6.35) apiece, raising $460 million.
Israel began commercial production of natural gas from the Tamar field (located offshore, near Haifa) in March 2013. The natural gas produced from the Tamar field travels through existing onshore facilities at Ashdod via a pipeline that links to existing infrastructure at the Mari-B development site. Plans are moving forward on a floating LNG project that will draw natural gas supply from the Tamar field (with estimated discoveries of 10 Tcf) and the nearby Dalit field and will produce approximately 3 million tons of LNG per year (144 billion cubic feet per year) as soon as 2017. The most recent offshore discovery occurred at the Tamar Southwest exploration well, located 8 miles southwest of the Tamar Field, and the Tamar Southwest field may contain more than 500 billion cubic feet of natural gas in place.
In early 2014, Noble Energy signed a natural gas sales agreement with two Jordanian companies to supply them with natural gas from the Tamar field. The initial term of the agreement with Jordan is 15 years, for a total gross quantity of 66 billion cubic feet, with exports beginning in 2016.
An independent research firm, Netherland, Sewell & Associates, Inc., stated in July 2017 that the Tamar field contains 11.2 trillion cubic feet of natural gas, with an additional 14.6 million barrels of condensate. If true, this represents a 13% increase from previous estimates of the field's potential yield.
The most significant find in offshore Israel is the Leviathan field, located approximately 80 miles off the coast and situated in water that is more than 5,000 feet deep. Assessments of the Leviathan field indicate that there could be as much as 19 Tcf of recoverable natural gas in place. Production could begin at Leviathan in 2016 at the earliest.
In January 2014, the Israeli government approved plans to supply the Palestinian Authority with natural gas from Leviathan once production commences.
The Israeli government approved the development of the Leviathan natural gas field on June 2, 2016. The field is expected to be operational by 2019, and contains an estimated 622 cubic meters of natural gas reserves. The project will cost at least $5 billion according to a spokesperson for Noble Energy, which owns a 39.7% stake in the oil field. Other owners include Delek Drilling and Avner Oil Exploration, subsidiaries of Israel's Delek Group, and Israel's Ratio Oil. An initial investment in the development of Leviathan, to the tune of $3.75 billion, was approved on February 23, 2017.
On September 27, 2016, the Jordan Electric Power Company finalized negotiations for Israel's Leviathan consortium to supply it with $10 billion in natural gas until 2031. Under this deal Israel will become Jordan's largest gas supplier, providing the Kingdom with an estimated 45 million cubic meters of gas from the Leviathan field.
The Mari-B field—discovered in 2000—provided the first significant volumes of domestically-produced natural gas to Israel's markets, but in 2012 production plummeted as the field entered the final stages of depletion. In prior years, the Mari-B field met up to 40 percent of Israel's natural gas demand. Israel's total production volumes in 2012 reached more than 150 Bcf, after being as low as 350 million cubic feet (MMcf) as recently as 2002. Natural gas consumption in Israel also grew in recent years, from an annual average of 350 MMcf between 2000 and 2002 to a peak of 129 Bcf in 2010.
Sources: U.S. Energy Information Administration;
Hillel Koren, “Renewed drilling finds oil near Dead Sea,” Globes (May 3, 2016);
“Israel approves development of large offshore Leviathan natgas field,” Reuters (June 2, 2016);
“Israel's gas royalties hit new record,” Globes (August 16, 2016);
“Israel consortium signs ‘historic’ 15-year, $10b gas deal with Jordan,” Times of Israel (September 26, 2016);
Steinitz: Israel made NIS 3b from exporting natural gas in 2016, Times of Israel, (February 13, 2017);
Tovah Cohen/Avi Rabinovitch.
Leviathan gas field developers approve $3.75 billion investment, Reuters,(February 23, 2017);
Israel Quietly Begins Exporting Natural Gas to Jordan Amid Political Sensitivities, Haaretz (March 2, 2017);
More gas offshore Israel than originally thought, UPI, (July 3, 2017);
Delek, Noble sign accords for $15b in sales of Israeli natural gas to Egypt, Times of Israel, (February 19, 2018);
UPDATE 2-Greece's Energean lists in London, raises $460 mln for Israeli gas project, Reuters, (March 16, 2018).