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Tamar Gas Field Not Enough to Prevent Price Hike

Israelis will still have to pay more for electricity next month, though the huge Tamar gas field has come online.
By Chana Ya'ar
First Publish: 3/31/2013, 12:42 PM

Minister Silvan Shalom at Tamar firld.
Minister Silvan Shalom at Tamar firld.
Moshe Binyamin, PR

Israelis will still have to pay more for electricity next month, despite the fanfare over the weekend announcing that the country’s huge offshore Tamar gas field has come online as a new natural gas energy source.

Four years after drilling began in the Tamar offshore natural gas field, the precious resource that began flowing Saturday evening from the offshore platforms to Ashdod is only going to reduce the amount of next month's price rise, not eliminate it as consumers so desperately hoped.

Prices will rise by six percent in April according to Energy and Water Resources Minister Silvan Shalom, who said he hopes this will be the last price rise – at least under his tenure.

Nevertheless, the gas field's developers, and politicians, hailed it as "a historical day." The gas is now flowing through pipes to a production rig off the Ashdod shore and flowing to the onshore storage facility.

But Shalom told Voice of Israel government radio on Sunday that reduced prices need to come from privatization – large private companies producing the electricity for the state with the natural gas flow at a lower cost, passed on the consumer.

He added that prices are “only” rising six percent because gas pumping at Tamar, which is expected to produce for at least the next 20 years, came online ahead of schedule.  

The savings to the Israeli economy from Tamar are expected to reach some NIS 13 billion ($3.5 billion) annually, but the country may benefit from an even larger source in the next year or so, when the Leviathan field is tapped.

In 2010, the Leviathan field was found with an estimated capacity of some 16-18 trillion cubic feet of natural gas about 130 kilometers (81 miles) off the coast of Haifa. The field, located in the Mediterranean Sea west of Israel’s northern port city, is expected to enable Israel to begin exporting natural gas to others, as well as producing it for her own citizens, by 2016.