Celebrations in Israel as it is now officially a gas-producing nation
Israel is no longer a resource-poor nation after the country started gas production at the Tamar offshore field today, putting it not only on the road towards energy independence but also to become a gas exporter. The first ever Israeli gas was expected to reach the port city of Ashdod by afternoon, the countrys Energy and Water Ministry said.
Celebrations in Israel as country inches towards energy independence
The Tamar field in the eastern Mediterranean Sea, estimated to hold 9 trillion cubic feet of natural gas, is being developed by a consortium group that includes Noble Energy Inc., Delek Drilling-LP, Avner Oil Exploration LLP and Isramco Negev 2 LP. Beside Tamar, Israeli energy exploration companies have also discovered enough gas under the Mediterranean to supply the country for 150 years.
We are talking about billions of dollars coming to the state of Israel from tax revenues on Tamar gas, Gilad Alper, a senior analyst at Excellence Nessuah Brokerage Ltd. in Tel Aviv, said in a phone interview. It will also reduce energy costs as we will replace expensive imports with a cheap domestic supply of natural gas. The start of the flow is a big positive for the economy.
In a joint statement, the companies involved in Tamar said that the project would save the Israeli economy about $13 billion a year in energy costs. The flow from Tamar is expected to contribute about 1 percent to Israels gross domestic product this year, the Bank of Israel said. As a result, the economy will grow at least 3.8 percent in 2013, including the contribution from gas.
The offshore gas deposits found off the coast of Israel
Such growth rate would be the highest among developed countries. The United States is expecting a 2.4 percent GDP growth this year, Britain 1 percent, Germany 1.6 percent, Switzerland 1.4 percent, Canada 1.8 percent, Australia 3 percent, Singapore 2.8 percent, Japan 2.7 percent, South Korea 2.3 percent, Hong Kong 3.5 percent and Taiwan 3.7 percent.
Prime Minister Benjamin Netanyahu is jubilant. This is an important day for the Israeli economy. We are taking an important step toward energy independence, he said. We have advanced the natural gas technologies in Israel over the last decade, which will be good for the Israeli economy and for all Israelis.
Israel has commissioned economists, mathematicians and statisticians to study the reservoirs to ensure proper management. The result recommended that Israel export up to 500 billion cubic metres of its gas while saving at least 450 billion cubic metres for its domestic needs. Other options include exporting liquefied natural gas (LNG) via pipeline to Jordan or Turkey.
Windfall gas revenues expected to strengthen Middle East most developed economy
The Tamar, together with two other fields, Dalit and Leviathan, will provide Israel with a reserve more than 14 times larger than Germanys total proven gas reserves. This is the beginning of a new era, said Isaac Tshuva, controlling shareholder of Delek Group Ltd. The Israeli economy will be able to exploit the advantages of natural gas environmentally, geopolitically, socially and economically, and turn Israel into an important international player.
Already, world powers are signing agreements with Israel. In February, Russias state-owned OAO Gazprom, the worlds biggest natural gas producer, signed an agreement for the exclusive rights to export liquefied natural gas produced from the Tamar floating LNG plant. China is sending officials to examine a possible investment in the Leviathan gas partnership, and has offered to build a rail link from Ashdod to Eilat.
The Bank of Israel also said the flow from the Tamar field will improve the nations current-account balance by as much as $3 billion this year. For every $1 billion improvement in the balance, the currency should appreciate about 1 percent, the bank has estimated. Indeed, global investors have drummed up support for the Israeli shekel, which last week hit its strongest level against the dollar since October 2011.
Israels economy is completely sheltered and isolated from the European crisis, said Guillaume Salomon, strategist with Societe Generale. Since November, the shekel has rallied 8.5 percent against the dollar and 7 percent against the euro. This comes at a time when other emerging-market currencies have lagged because they were either weighed down by concerns over individual economies issues or lingering concerns over Europes sovereign debt crisis.
Famously empty of natural resources, the discoveries of natural gas in Israel, a country that imports virtually all of its energy needs, are viewed by many in the country as a genuine economic game-changer. Observers say the discoveries could spur economic and political powers to consider large-scale infrastructure investments in Israel to facilitate the development of the resources. Countries that have already expressed interests include Russia, China, France, Australia and India.
A Jordanian government official said Jordan would be interested in Israeli gas if its cheap. He spoke on condition of anonymity because no decisions have been made. Jordan signed a peace agreement with Israel in 1994, and new commercial ties would help cement that peace. Israel generates approximately 40 percent of its electricity from natural gas and until 2011 before the fall of President Hosni Mubarak, Egypt supplied 43 percent of its gas supplies. The rest was from Russia.
Now that Israel is rich in gas, it is cancelling the decade-old gas supply agreement with Egypt, and sued the near-bankrupt country for $2 billion over breach of contract following Egyptian act of unilaterally voiding the supply after its 2011 revolution. The arbitration process is taking place in Paris under the auspices of the International Chamber of Commerce.
With a Human Development Index (HDI) of 0.900, Israel is the most developed country in Middle East. Boycotted by a quarter of the planet, it has built up an advanced economy with a GDP per capita similar to that of Hong Kong. Invaded by a coalition of Arab armies on the first day of its independence, it currently own the worlds fourth largest airforce fleet. The country has the highest ratio of PhD university degrees to population in the world, and 7 of its 9 universities are ranked in the worlds top 500.
Israel leads the world in number of scientists and technicians in the workforce, with 140 per 10,000, as opposed to 85 in the U.S., 83 in Japan, and 60 in Germany. It is also a world leader in software, telecommunication and semiconductors development. Israel technological achievements is disproportionate for a country of just 8 million. It gave the world instant messaging, with the Israeli company Mirabilis invented the ICQ, which was then bought by America Online to become AOL Instant Messenger.
The popularity of AOL led to it to be followed by Microsoft and Yahoo into the commonly-used MSN Messenger and Yahoo Messenger today. Israeli company Comverse brought to the world the telephony voicemail in 1980s, which was quickly adopted by telecom companies and now integrated as a basic feature for smartphones. Israels VocalTec Communications created the VOIP technologies, the technology that evolved into Skype today.
The concentration of high-tech industries in Israel, which are backed by a strong venture capital industry, gave it the nickname Silicon Wadi, considered second in importance only to its Californian counterpart, where Israeli technological invention would be sold to in order to circumvent international boycott. Israel is the country with the most engineers per capita in its population, and it ranks second behind the United States in the number of companies listed on Nasdaq, said David Kadouch, product manager at Google. Its really a second Silicon Valley, he said.
Israeli scientists have contributed to the advancement of the natural sciences, agricultural sciences, computer sciences, electronics, genetics, medicine, optics, solar energy and various fields of engineering. Technological utilization has allowed Israel to create farmlands and export food out from deserts, and it is the only country in the world that entered the 21st century with a net gain in the number of trees.
Outside the Muslim world, Israel won much praise for its achievements. When asked why was he bothering to invest a huge sum of money in a small country like Israel, Warren Buffet, known for his stock market insights and also being the second wealthiest man in the United States, explained If youre going to the Middle East to look for oil, you can skip Israel, but if youre looking for brains, look no further. Israel has shown that it has a disproportionate amount of brains and energy.
The former Chineses ambassador to Israel, Zhao Jun, said the country is widely admired in China. We in China admire you and your Jewish mind, which has brought so many Nobel prizes. The free China (communist government) was established in 1949, one year after Israel, but we view what you have achieved as a miracle. We admire you for creating miracles for 62 years. In a world where China and America compete for global influence, Jews are warmly welcomed in both countries.