Israel's natural gas saved the economy over NIS 316b. in past decade

The country’s natural gas revolution has had a profound impact on the country’s economy, resulting in substantial savings and positioning Israel as a natural gas powerhouse, according to a report by BDO, the largest economic consulting firm in Israel

The country has saved over NIS 316 billion over the past decade thanks to natural gas production.

The report, published on the 10th anniversary of natural gas production from the Tamar reservoir, highlights two significant categories of savings. The availability of natural gas has led to estimated energy cost savings of NIS 126b. Additionally, using local natural gas instead of coal and other polluting fuels has resulted in savings of NIS 190b. in pollution-related costs.

These savings have directly benefited households, with the average family saving over NIS 120,000 during the past decade.

The increase in natural gas production over the past 10 years has been remarkable, with a 400% surge compared to the previous decade. Despite this substantial increase, the total natural gas reserves in Israel have also grown. In 2012, Israel had around 780 billion cubic meters of natural gas, while today it boasts 1,087 BCM. This 40% increase in reserves is a result of additional discoveries in Israel’s economic waters and updated estimates of reservoir sizes, indicating that there is still untapped potential for future extraction.

The economic benefits of the natural gas industry are expected to continue, with forecasts indicating that by 2030, another NIS 70b. will enter the state coffers from natural gas funds. This additional revenue, combined with previous payments, will amount to approximately NIS 90b. by 2030. Looking further ahead, it is projected that by 2050, the amount paid directly to the state coffers will surpass NIS 300b.

Israel's standing among the OECD

The report reveals that Israel leads the OECD in saving gas for the future, with a local production rate that is only about half of the rate among the largest gas producers in the OECD. Moreover, Israel ranks third in natural gas reserves per capita, with reserves twice as large as Canada and almost three times larger than the United States.

The report also emphasizes the contribution of natural gas to environmental sustainability. Over the past decade, the use of natural gas has led to a 32% reduction in the intensity of carbon dioxide emissions from electricity production, resulting in significant savings of approximately NIS 23.9b. in pollution costs. Additionally, there has been a notable decline in local air pollution, with NOx emissions decreasing by approximately 76% and SO2 emissions decreasing by around 85% in the same period. The total savings in pollution-related costs amount to roughly NIS 190b.

Chen Herzog, chief economist and partner at BDO, underscored the importance of utilizing natural gas in the local economy. ”Israel... enjoys a relative advantage in the use of natural gas for domestic consumption and for export. Now is the time to enjoy this advantage through the use of natural gas in the local economy and the expansion of exports,” he said.

Amir Foster, CEO of the Israel Natural Gas Association, emphasized the significance of the natural gas industry as a growth engine for the Israeli economy, which “has made it immune to the energy crisis that is shaking the world.”

Foster added that “The next stage in the development of the Israeli energy economy, which will ensure energy security for decades to come, will be created through the continued development of local production capabilities and export infrastructure and will allow Israel to break through beyond the regional arena and become an important international energy supplier.”