Energy

Energy consumption, particularly electricity, is growing fast. Due to its limited energy resources, Israel imports virtually all its oil needs ($6.8 billion in 2005 and $4.5 billion in 2004) from Egypt, Mexico, West Africa, the North Sea, and more recently from Russia. Oil exploration in Israel has not been successful, but the Israeli Oil Commission estimates that Israeli’s underground is likely to contain 5 billion barrels. Israel Oil Refineries (IOR) runs the two existing refinery facilities in Haifa and Ashdod.

The government decided at the beginning of 2000 to tap natural gas to produce electricity. In 2003, the State created the Natural Gas Authority (NGA) and the transport company Israel National Gas Lines (INGL) under the Ministry of Infrastructure to elaborate a plan of national interest, with natural gas accounting for 60 percent of overall production of electricity in the long term.

Annual demand for gas is 1.6 billion m3 for electricity and industry and the NGA forecasts requirements for the 20 years to come at 11 billion m3.

The two largest users are the Israel Electric Corporation (IEC) and Oil Refineries Ltd (Bazan).

The Yam Thetis consortium will be the main natural gas supplier to IEC for an 11-year period starting 1 January 2004. Yam Thetis also signed an agreement in 2004 for the provisioning of natural gas from Ashquelon to the Ashdod refinery. This agreement covers a period of 10 years, renewable if warranted by developments at the Ashdod refinery.

A historical agreement was signed in July 2005 concerning export of gas from Egypt to Israel. An Israeli-Egyptian consortium “Eastern Mediterranean Gas (EMG)” will import Egyptian gas for a period of 20 years, part of this gas having to be sold in Israel, but another portion being available for possible re-export to Europe and Turkey. In addition, EMG and IEC have signed a contract for the supply of 1.7 billion m3/year for 15 years. EMG is also in charge of building the pipeline from El Arish in the Sinai to Ashkelon.

A wide-ranging plan for natural gas supply was launched to cover Israel’s deficit, expected to reach 50 billion m3 by 2025. The government is looking for suppliers and additional managers for Yam Thetis and EMG. Israel National Gas Lines (INGL) holds a monopoly on transport that will last at least until 2007, the target date for privatisation. As for the future distribution network, the NGA will grant regional licences, five of which are already scheduled solely for infrastructure.

These licences will be granted under BO (Build/Operate) arrangements for low-pressure systems. The grid systems on the southern portion (Ashdod-Ashkelon) already exist and the licence should be granted end 2005 - early 2006. Invitations to tender for the distribution networks however are intended mainly for local companies.

Israel has become a major actor in sustainable energies. Developments in the field of alternative energies include flat solar collectors for domestic use, solar ponds and a parabolic trough technology.

Regulations require that all new buildings equipped with solar collectors for water heating. Household solar collectors save some 3 percent of overall energy consumption and Israel boasts one of the highest rates of domestic solar heating worldwide, used in about 75 percent of households. Israeli companies have pioneered solar technologies that are used worldwide. Solel, for example, was the first to develop and install a large-scale solar-powered electricity generating plant in southern California’s Mojave Desert. Plans are now going ahead in Israel to establish a 100 MW solar power plant in the northern part of the Negev desert. The technology is available but the cost is still too high to compete with alternatives, particularly in light of the low cost of natural gas. In recent years, Israel has taken important steps towards advancing the use of alternative energy. A 2002 government decision called for introduction of renewable energy in the electricity sector so that by 2007, at least 2 percent of electricity consumption would be produced by renewable energy (beyond that of domestic solar heaters) and by 2016 at least 5 percent should be produced by renewable energy.

Next section (Transport)