Matt Hoisch
Even as producers push to expand gas exports from Israel following a decade of dramatic growth that has seen it morph into a key regional supplier, domestic needs remain a priority for the country ahead of its fifth offshore gas exploration round, Israel's Petroleum Commissioner at the Ministry of Energy and Infrastructure told Platts, part of S&P Global Energy, in a recent interview.
"Israel is a developed country, but we're still emerging," Chen Bar-Yosef said. "We think we should have more gas findings and exploration in order to make sure that for the long run we are ready, and we have our sufficiency of supply for all our needs."
Those needs are growing. One burgeoning driver is the artificial intelligence industry.
"Israel is and wants to be part of the AI world," Bar-Yosef said. "We think AI and AI data centers will come to Israel and therefore we want to be ready."
The commissioner was adamant electricity "should come first from renewables" with gas as "complementary."
Even so, annual domestic gas needs are projected to grow over the coming decade from some 14 Bcm to 20-24 Bcm by 2035, he said.
Growing output
Israel's gas output has grown significantly since its landmark Tamar gas field began production in 2013. Output from Tamar and the country's other two major offshore fields -- Leviathan and Karish -- rose to a record high of 27.4 Bcm in 2024, according to energy ministry data.The burgeoning flows have enabled producers offshore Israel to secure export contracts with consumers in neighboring Jordan and Egypt, the latter of which has pushed to fill a gap left by its own declining gas production in recent years.
Domestic market concerns were a sticking point for the Israeli government when reviewing the latest such deal: a further 130 Bcm of exports to Egypt from the Leviathan field over the coming years. The agreement, which Israeli Prime Minister Benjamin Netanyahu described as "the largest gas deal in Israel's history," is worth an estimated $35 billion.
Before approving the deal this past December, though, regulators sought assurances that would shield the Israeli market from impacts, according to Bar-Yosef.
"We got promises for prices in Israel," he said.
The heightened exports are set to flow on the heels of greater Leviathan output: in January, the field's partners -- Chevron, NewMed Energy, and Ratio Energies -- reached final investment decision to expand production capacity to some 21 Bcm/ year toward the end of the decade.
New players
On top of ensuring adequate gas supplies for the Israeli market, the ministry is also keen to ensure those volumes come from a diversity of sellers as it oversees the sector's evolution."Competition is a very important issue for us," Bar-Yosef said.
"The Israeli government, because of the diversification and competition issue, has a great appetite for new players to come," according to Elad Golan, who served as head of the regulation department at Israel's ministry of energy until early 2023 and now runs Negev Consulting, an energy consultancy.
The new exploration bid round -- another opportunity to spur that competition -- is Israel's first since war with Hamas broke out in October 2023. Bar-Yosef, however, discounted the possibility the recent violence would deter companies from exploration.
Operations, he stressed, are in the Mediterranean, rather than on land.
"It's not working directly in Israel," he said. "It's working offshore."
He also underscored that operators largely sustained production throughout much of the war.
"Most of the time -- I'm talking about more than 95% of the last two years -- production was ongoing," he said. "It shows that yes, you can work in Israel, even in harsh times. Hopefully there will be no more, but, of course. we cannot promise that."
Exports
While the domestic energy market remains a priority for Israel's government, export infrastructure is also moving ahead.The energy ministry expects a long-awaited pipeline connecting Ashdod and Ashkelon to be completed in the first quarter of 2026. The pipeline, which faced delays amid the war with Hamas, will support increased exports to Egypt.
The ministry anticipates another project supporting gas flows to Egypt -- the Nitzana pipeline -- will be finished in October 2028.
Efforts to send gas further afield remain more nascent.
Bar-Yosef maintains European markets are "still an option."
The ministry supports a private proposal to develop a pipeline to nearby Cyprus, he said. However, the recent former Cypriot energy minister, George Papanastasiou, cast doubt on the plan's economic viability amid ongoing efforts to develop an LNG import terminal in the East Mediterranean country.
LNG is another option for Israel to export to Europe and beyond. But Israeli liquefaction remains a longshot.
"I doubt there will ever be LNG exports from Israel under current technologies," said Professor Brenda Shaffer, a faculty member with the US Naval Postgraduate School focused on geopolitics and gas trade. "There's no available coastline for that."
Shaffer is also skeptical of the prospects of developing floating LNG units offshore Israel. "I can't really see FLNG working in a place with Israel's tenuous security situation," she said.
Bar-Yosef likewise conceded FLNG could be hard for companies to finance with Israel's existing export volumes.
"With small quantities, it [FLNG] won't work," he said. "It needs bigger quantities than what we have right now."
Greater exports via Egypt's existing liquefaction plants could be more likely, according to Shaffer.
Platts, part of S&P Global Energy, assessed the DES East Mediterranean LNG marker at $11.722/MMBtu on Jan. 22.
