Israel Plans $6 Billion Energy Overhaul, Relocating Refinery South

Israel's Ministry of Energy and Infrastructure has unveiled a comprehensive strategic plan to reshape the nation's fuel sector by 2040. The plan, developed with BDO, recommends relocating the Bazan oil refinery from Haifa Bay to southern Israel and establishing a new hybrid refinery there. This move aims to bolster Israel's energy security, particularly in light of recent wars and geopolitical instability, which have highlighted the risks of relying solely on imported refined fuels.

The proposed relocation includes a "build-and-evacuate" framework for the existing Bazan site. The new southern facility will be designed to produce future fuels, including sustainable aviation fuel (SAF) and biodiesel. Economic analysis suggests the relocation costs, estimated between $5 and $6 billion, could be financed by projected carbon taxes, which are expected to generate around $9 billion.

In addition to maintaining domestic refining capabilities, the plan calls for increasing strategic fuel reserves, expanding storage and transport infrastructure, and developing additional import points for fuels. Energy Minister Eli Cohen stated that the energy sector performed well during the recent war despite damage to strategic facilities, and this plan will ensure Israel's energy security for decades to come.

Bat Sheva Azikri Abuhatzira, Director of the Fuel and Gas Administration at the Ministry, emphasized that Israel, as an "energy island," requires redundancy throughout its supply chain for energy security. An inter-ministerial team is currently being convened to explore the establishment of a stable fuel authority to expedite the plan's implementation.