An Energy Superpower



By: YOSEF TASTASSA  
Published: November 18th 2010
in Economics » Israel

Oil rig

A dream comes true

 

Until not long ago almost every Israeli citizen used to complain about the injustice. Israelis used to complaint and joke about themselves: "How come our neighbours have so much oil under their feet? Wherever they dig they find oil and where ever we dig we find only mud and sand.

 

In years of tension that joke was not funny at all. Israel was and still is surrounded by the Arab states and the only way to get energy was to import it. Being dependent on foreign resources of energy in such a neighbourhood is not easy it all.

 

In addition, importing energy, especially when prices are extremely high, is a severe burden to the Israeli economy.

 

Then, came the unexpected, and for the last two years the energy sector in Israel is going through a dramatic change due to some very important discoveries, most of them in the deep waters of the Mediterranean Sea.

 

Tamar, Dalit, Sarah and Mira

 

They are known as Israeli common names for girls, but they are also names of some very important discoveries. Tamar is an already proven natural gas reservoir that was found in the Mediterranean Sea, west of Israel's cost and in its economic waters. Tamar is the world's largest energy discovery in 2009. Leviathan (See separate article) is located 135 km west of the port city of Haifa. It has 50 per cent chances to be a discovery on a huge scale. The geological estimations talk of about 16 TCF (Trillion Cubic Feet).

 

The other girls' names are still in an initial geological survey but sooner or later drillings will start and in five years from now it is probable that natural gas and maybe even oil will float from Israeli reservoirs to Israel and its neighbours.

 

Energy sector shares

 

"Isramco" – Has a market value of nearly $1.3 billion. The shares have surged by 550 per cent since January 2009.

 

"Delek Energy" - Has a market value of nearly $1.45 billion. The shares have surged by nearly 600 per cent since January 2009.

 

"Delek Drilling" - Has a market value of nearly $1.85 billion. The shares have surged by nearly 600 per cent since January 2009.

 

"Avner" - Has a market value of nearly $2 billion. The shares have surged by nearly 550 per cent since January 2009.

 

"Ratio" - Has a market value of nearly $830 million. The shares have surged by nearly 1,600 per cent since January 2009.

 

"Gevaot" - Has a market value of nearly $200 million. The shares have surged by nearly 800 per cent since January 2009.

 

Current situation

 

The Eytan Sheshinsky Committee published this week its intermediate conclusions with regards to the benefit of the State of Israel from the energy discoveries. The conclusions caused a real drama in the markets. Stocks slipped by 10 per cent in one morning and closed by 3 per cent positive in the same day. A maneuver of 13 per cent in one day shows how emotional the sector is.

 

Sheshinsky is recommending increasing the taxes to be paid to the State and if his recommendations are accepted as is, stocks may fall sharply because he profits in the sector will be less attractive.

 

What to do

 

Personally, I truly believe that the new discoveries are a great opportunity for the State of Israel. If Israel acts wisely it will be independent in its energy needs. A reasonable solution for taxing the gas producers should be found in order to keep it attractive and profitable on one side, and it should also be profitable for the State of Israel and its citizens who own the gas reservoirs by natural law.



Related articles: (Israel, energy, natural gas)


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