Israel to keep more natural gas for domestic use -minister

TEL AVIV, June 12 Wed Jun 12, 2013 7:14am EDT

TEL AVIV, June 12 (Reuters) - Israel will keep more than half of its estimated natural gas reserves for domestic use, Energy Minister Silvan Shalom said on Wednesday.

Once totally dependent on fuel imports, Israel has made the largest offshore gas discoveries in the world over the past decade off its Mediterranean coastline. It is expected to become an exporter by the end of the decade.

But Israeli leaders are struggling to find the balance between how much gas to keep and how much to export. Though Israel wants to ensure its own energy independence, without a significant export quota foreign companies have said they would not invest in further exploration because the Israeli market is too small.

A government committee recommended last year that Israel keep enough gas to satisfy its own needs for 25 years, which comes out to a bit less than half of the country's total reserves, currently estimated at 33.5 trillion cubic feet (tcf).

"I think we are now in agreement on adopting the position that we have to increase the amount that must remain in Israel," Shalom told Israel Radio after a meeting Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid on Tuesday.

"I think the prime minister is also of the opinion that we have to ensure energy independence: we have to ensure there is gas in the coming years."

Although Shalom did not specify the amount to be retained for domestic use, he said it would be greater than the 50 percent recommended by the government committee.

"I believe there is pretty wide agreement among all the parties as to the amount that should remain in Israel," he said. "I believe it is the correct percentage, a percentage that will open the way for energy independence ... and also enable the companies to come here and drill to discover other gas fields so that the gas reserves will be much bigger."

The Tamar field, which came online in March with an estimated 10 tcf of gas, can meet Israel's needs for decades. The nearby Leviathan field, which is expected to begin production in 2016, is estimated to hold 19 tcf.

A number of lawmakers and environmental groups have demanded a large majority of Israel's reserves be kept for domestic use.

Texas-based Noble Energy, which leads the Leviathan group, has said that because Israel is such a small market, it could not commit to developing the field unless a significant amount of gas was allowed to be sold abroad.

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