Israel is exploring options for building an onshore or floating LNG (FLNG) facility offshore, potentially expanding the country’s lucrative natural gas exports and its foothold in the global market.
Over the past several years, the Israeli Energy Ministry has taken steps to use two of the country’s massive gas discoveries, the Tamar and Leviathan fields, to become a regional gas hub in the Eastern Mediterranean. However, without a liquefied natural gas facility of its own, Israel is currently dependent on pipeline exports to Egypt’s two terminals to deliver its volumes to global buyers.
Israeli news media reported that Energy Minister Eli Cohen had ordered a study of the country’s options for building its own LNG export terminals, citing sources within the administration.
"Building an onshore liquified natural gas or FLNG facility will make it possible to maximize the state's revenues from gas exports, and diversify export targets…" Cohen told the Israeli business journal Globes in March.
Israel has been searching for alternative gas pipelines or LNG export outlets for several years.
NewMed Energy, the largest partner in the Leviathan gas field, wrote in a February 2023 report to the Tel Aviv Stock Exchange that it had allocated $51.5 million for a preliminary study of an FLNG facility. The terminal was targeted to export around 4.6 million metric tons/year.
Qamar Energy CEO Robin Mills told NGI Israel could be eyeing an LNG facility not just to boost its global market exposure, but to also diversify risk away from its current major export outlets.
“Israel wants to diversify its gas export markets from Egypt and Jordan, particularly given the current political situation which would make it unpopular for either of these countries to raise its imports from Israel… ,” Mills told NGI.
Rising Costs
However an onshore facility looks unlikely. Mills doubts an onshore plant will be feasible because “coastal land is very limited and there would be high opposition from local communities.”
Although an FLNG is more feasible, it would still have security concerns given the vulnerability of a large, static offshore installation.
Construction costs for FLNGs have also jumped since the Covid-19 pandemic.
The Israeli state is the regulator for the gas field and is said not to have the authority to organize private financing for projects, so the financing would likely have to come from the Leviathan partners or other sources.
Israel currently uses three pipelines for gas exports. Plans for new routes have surfaced over the years, but building new pipelines to nearby countries has largely been deemed challenging, politically difficult and expensive.
Despite Middle East tensions, Israeli gas exports to Egypt and Jordan increased by 28% last year. Cohen said earlier this year that the increase of Israeli exports to Egypt and Jordan shows “how much the natural gas market is a strategic asset for Israel and helps regional stability.”
The Leviathan gas platform, Israel’s largest, has remained in operation throughout the war with Hamas while the Tamar platform, off the coast of Ashkelon, was shut for several weeks last October and November.
Exports from Leviathan increased by 28% last year, according to NewMed Energy. Exports to Egypt jumped to 6.3 billion cubic meters (Bcm) last year, up from 4.9 Bcm exported in 2022, according to the company.
The Tamar field exported 2.56 Bcm, with the majority delivered to Egypt. Chevron Corp. and its partners are moving forward on a $24 million investment for phase two to increase Tamar’s production from 12 to 14 Bcm, following an agreement to sell an additional 4 Bcm of gas to Egypt for 11 years, starting in July 2025. Tamar currently exports about 2 Bcm/year to Egypt.
