Oil and Gas

Israel's Tamar gas field to start paying taxes on profit in 2021

JERUSALEM, July 22 (Reuters) - Delek Drilling said on Wednesday the partners in the Tamar natural gas site will start paying taxes on profit in early 2021, which could help Israel move forward with plans to create a sovereign wealth fund.

Prime Minister Benjamin Netanyahu has said that tens of billions of dollars raised from taxing natural gas sales would be invested abroad via a sovereign wealth fund, with proceeds brought home for education, welfare and other services.

The fund, aimed at preventing Israel’s currency from overheating because of the sudden influx of natural gas revenues, was due to be set up in 2018, but political turmoil and a slower stream of revenue have caused delays.

The minimum needed to begin investing will not be reached before the end of 2021, Andrew Abir, the Bank of Israel’s deputy governor, told Reuters this month.

Delek Drilling and Noble Energy own 47% of the Tamar field off Israel’s Mediterranean coast that began production in 2013, while Isramco holds 28.5%.

Delek said it would start paying the tax in early 2021 and that by the end of 2025, the state’s income from the levy alone was expected to reach about 8 billion shekels ($2.3 billion) and some 15 billion shekels including royalties and taxes.

The company said its best estimate of reserves in the field -- which earlier this month began supplying gas to Egypt -- is 10.7 trillion cubic feet (302 billion cubic metres). Tamar has a value of $6.57 billion, Delek said.

On Monday, Chevron Corp said it would buy Noble for about $5 billion in stock. Noble’s flagship field is Leviathan offshore Israel, the largest natural gas field in the eastern Mediterranean.

$1 = 3.4239 shekels Reporting by Steven Scheer. Editing by Jane Merriman