Israel Considers Relocating Bazan Oil Refineries from Haifa to Negev

Israel's Ministry of Energy has recommended relocating the Bazan oil refinery complex from the Haifa Bay to the Rotem Plain in the Negev desert, a project estimated to cost between $5 and $6 billion. This proposal serves as an alternative to a previous government decision made in 2022 to completely shut down Bazan and transition Israel to imported fuel. A multi-year work program for the closure, with a target shutdown date of August 2029, was published in June 2023. The original plan involved demolishing the plants, cleaning the industrial zone, and redeveloping the land for housing, offices, and commerce, including a potential "Innovation Bay" and relocating parts of the Technion institute.

However, the original timeline was considered ambitious, and the October 7th war prompted a strategic reassessment. A new study commissioned by the Ministry of Energy from international consulting firm BDO suggests that Israel cannot afford to become overly reliant on imported fuel, especially in emergency situations. The study, which incorporates lessons from the war and concerns about supply disruptions, recommends keeping Bazan operational by moving it.

Bazan has reportedly presented the state with a compensation claim exceeding $5 billion for the relocation of its petrochemical industry. The proposed scheme involves state funding for the move. BDO's chief economist, Hen Herzog, estimates that new refineries in the Negev could be built by 2033. He suggests that funding could come from the "carbon tax" (an excise on fossil fuels), which is projected to generate around $9 billion over the next two decades. The new "hybrid" refinery would process oil and produce advanced fuels, including sustainable aviation fuel.

The recommendation also includes enhancing national fuel storage, transportation, and import infrastructure to mitigate risks associated with relying solely on imported refined products, which could leave the country vulnerable to potential embargoes during future conflicts. This aligns with the position of the National Emergency Management Authority (RAHEL) within the Ministry of Defense, which stated in April 2026 that Israel must maintain domestic oil production capabilities and cannot depend exclusively on imports. RAHEL advised against closing Bazan until the new Rotem Plain refinery is operational to prevent critical disruptions to the energy system.

Bazan's Haifa facilities, occupying 2.12 square kilometers, account for 60% of Israel's refining capacity. The company estimates its share of the Israeli refined products market at approximately 65%. The complex produces various fuels, polymers, fertilizers, and bitumen, with up to 40% exported. The facilities have been targeted in past conflicts, raising safety concerns due to their proximity to Haifa's urban area. The timing of the BDO study's release, just 50 days before Knesset elections, raises doubts about the swift implementation of any new decisions, with the matter likely falling to the next government. Bazan stated that preserving its operations is vital for Israel's energy security and that it will continue to cooperate with the state.