Israeli Gas: Too Soon to Declare Victory

• Israeli gas might not be developed for years to come without at least partial resolution of a number of challenges, including uncertainty about export markets and high risks for potential buyers.
• To facilitate the development of Israeli gas, the government should promote an honest and open national public conversation about gas and should replace problem making with problem solving.
• A robust national public conversation will help manage expectations about future benefits of the development of Israeli gas and deepen the foundations for project development.
• To enable the development of Israeli gas, the Israeli government should work to address risks that worry investors, attract new commercial partners and consider public investment.

The only obstacle to Israel’s capitalizing on its gas bonanza is government interference, according to the dominant narrative in the country; if only the authorities approve a new framework for the gas sector, an economic and geopolitical windfall will follow.[1] This narrative has some truth to it. Hitherto the government has done more to hamper development than to enable it. But the assumption that billions of dollars of investment will follow once the Israeli government gives the green light, and the inevitable appeals have been exhausted, is wishful thinking. The resolution of the antitrust stand-off will heal a self-inflicted wound but will do little to address the other challenges holding back Israeli gas. Only when these are addressed can Israel begin to sell its surplus gas in foreign markets and, even then, the benefits will be fewer than advertised. Israel needs a reality check on what it will take for its gas to reach export markets and what to expect when, and if, it does.

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Originally published by The German Marshall Fund of the United States on the 14th January 2016.

Nikos Tsafos

Nikos Tsafos is President & Chief Analyst at enalytica. Republished with permission.