Map of huge oil field off Haifa coast
Map of huge oil field off Haifa coastIsrael news photo: off shore

The Tamar gas field, 50 miles off the Haifa coast, keeps getting bigger with every report, and the gas discovery now is estimated to be the world’s largest in 18 months. The Scotland-based Wood Mackenzie research and consulting firm assessed the value of the field at $8 billion, approximately double that of local analysts.

The latest upside projection comes less than two weeks after another revised estimate that the reserves are 16 percent higher than previously thought.

Changing gas prices could make the gas worth anywhere between $3.5-$17 billion in the future, and partners in the offshore project are preparing for the first deliveries of gas in 2012. They have approved expenditures of $230 million for equipment and services to be provided by Noble Energy, a partner in the project, along with Israeli firms Delek Drilling, Avner Oil and Gas and Isramco.

The future impact of the gas field on the Israeli economy is enormous. "Few doubt that the country, which for decades has been dependent on importing nearly all of its energy needs, has entered a new era of far greater economic independence,” Business Week commented in its current issue.

Delek official Yitzchak Tshuva jubilantly announced after the discovery that Israel is on the road to energy independence. Tshuva and other project participants stated, "We have already sufficient Israeli natural gas to meet all of the country's needs for many years, and we intend to continue searching in our many franchises off the Israeli coast.”

The area of the gas discovery has largely been unexplored, leaving open the possibility of more finds, perhaps even of oil. Delek Drilling's Tzvi Greenfeld said, "If we find more gas, then there is a greater chance Israel will become an exporter."

The multi-billion infrastructure work for new sea-to-land gas lines and for a 500-kilometer long (311 mile) distribution network will create hundreds of jobs for engineers and workers. The move to gas from oil and coal will help diversify the economy, Ohad Marani, board chairman of the state-owned gas distribution network told Business Week.

The Finance Ministry will enjoy approximately $5 billion in royalties when gas starts flowing, estimates Gal Reiter, energy industry analyst at Clal Investments. Furthermore, Israel will drastically cut back the $5 billion it pays for fuel imports, leading to stronger balance of payments.

An era in which Israel will be more self-sufficient in energy needs also will help make the shekel more attractive. Cheaper foreign currencies will help lower the price of imports for consumers but could cause further problems for the exporters, whose profits are dented after income in dollars and euros is exchanged for shekels.