Energy-Dependent Israel Finds Natural Gas
STEVE INSKEEP, host:
A giant gas field has been discovered off the coast of Israel. The find was announced last month and the field is being called Leviathan, after the biblical sea monster. With an estimated 16 trillion cubic feet of gas, it is the world's biggest gas discovery in a decade. [POST-BROADCAST CORRECTION: It was actually the world's biggest DEEP-WATER gas discovery in a decade.]
NPR's Lourdes Garcia-Navarro reports on what it means for Israel and for the region.
LOURDES GARCIA-NAVARRO: This is a story of decades of thankless toil, an amazing discovery and the problems that too much of a good thing bring to a region as contentious as the Middle East. It's a story about how Israel - a famously energy-dependent country - found gas.
Mr. YIGAL LANDAU (CEO, Ratio Oil Exploration): The sweet taste of success, finally reaching the goal.
GARCIA-NAVARRO: That's Yigal Landau the CEO of Ratio Oil Exploration. The announcement late last month of the Leviathan field caps a stunning two years here. In 2009, the Tamar field was discovered, also a huge find. U.S. based Noble Energy and a group of Israeli companies like Ratio Oil toiled for decades here without success. They struck dry well after dry well.
Mr. LANDAU: Israel is known to be the land of milk and honey, never before gas and oil in these magnitudes have ever been found.
GARCIA-NAVARRO: It's kicked off a craze and companies like Ratio Oil are finally reaping the benefits.
Mr. LANDAU: People like these Cinderella stories of companies such as my own company, Ratio Oil, that went up 1,000 times its original price per share; it became the most popular stock in Israel and everybody are talking about that and this is natural.
GARCIA-NAVARRO: Booming energy sector aside - and make no mistake it is booming - the energy index of the Tel Aviv Stock Exchange went up over 1,500 percent last year, there are broader benefits to the bonanza.
Dr. AMIT MOR (Chief Executive Officer, Eco Energy, Ltd.): In five to seven years time, according to our estimates, about 70 percent of Israel's electricity will be produced from natural gas, which is much cheaper than oil and much more environmentally friendly.
GARCIA-NAVARRO: Amit Mor is an energy analyst in Tel Aviv. He says most of the gas will come from local Israeli sources, giving Israel a kind of energy independence it's never had before.
While the Tamar field is slated for domestic use, Leviathan will be used to make Israel an energy exporter, potentially bringing in revenue to the tune of $90 billion.
The amount of money at stake has everyone clamoring for a piece of the pie. Ratio Oil is being sued by a geologist for 2.5 billion Israeli Shekels, about $700 million, because the geologist says information he provided led to the huge Leviathan strike.
Developers like Landau are furious at the government. They say that after years of toil and investment, the government now wants to raise its take from something around 30 percent to more than sixty percent.
Mor, the energy analyst, says Israel currently has one of the lowest taxes on energy companies in the world.
Mr. MOR: It is a legitimate dispute over the right of the public to enjoy from the profits of natural resources, since the prevailing petroleum law was legislated in 1952 about 60 years ago, and it was not changed since then. So it's about time.
GARCIA-NAVARRO: The United States even got involved in that dispute, lobbying the Israeli government on the issue since Noble Energy is an American company. Mor warns though that the frenzy inspired by the potential profits obscures the long road Israel still has to travel to develop and export its natural gas. A pipeline or a huge liquefied gas plant would have to be built - both costly and time consuming endeavors. Mor says the payoff may not be seen for a decade, at least.
And to further complicate matters, regional politics has, of course, come into play. The sea boundary between Israel and Lebanon has never been delineated. And both the Lebanese government and the Lebanese Hezbollah militia claim that parts of the new fields are in their waters. Most Israeli analysts dismiss the legality of those claims.
Lebanon last week asked the UN to intervene in the dispute and establish a maritime border. The UN said it would not be getting involved.
Lourdes Garcia-Navarro, NPR News.
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Correction May 4, 2011
This piece incorrectly said the gas discovery was the world's largest in a decade. It was actually the world's largest deep-water gas discovery in a decade.