Israel to Maintain Gas Export Levels Amid Server Farm Demand

The Dayan Committee, tasked with formulating Israel's natural gas policy, has finalized its recommendations, deciding against increasing restrictions on natural gas exports. This decision comes despite significant demand from electricity-intensive server farms, which are projected to account for one-fifth of Israel's future electricity consumption. The committee emphasized the importance of encouraging new gas exploration, noting potential interest from a major international company, described as "Chevron-sized."

Despite strong opposition from the Ministry of Finance, which advocated for stricter export limits and a higher reserve requirement for the domestic market, the committee upheld the current policy. The obligation to reserve gas for domestic needs will remain at 440 billion cubic meters (BCM), deemed sufficient to cover all local requirements until 2046 without external imports. The Ministry of Finance's proposal to increase this reserve to 515 BCM and its suggestion to separate major gas fields like Tamar or Leviathan from Chevron's control were rejected to attract more foreign investment.

However, the committee did adopt a principle proposed by the Finance Ministry: ensuring a consistent surplus of gas supply over demand at all times to foster competition and encourage price negotiation. While the specific proposal for a 13%-20% daily supply surplus was rejected, the committee's final recommendations aim to establish export volumes that maintain this necessary buffer.

The committee also addressed the burgeoning demand from server farms, acknowledging that their electricity needs could reach 20% of Israel's total consumption. This surge, driven by the AI revolution and relatively low electricity prices in Israel, poses a challenge to the national grid and requires significant gas resources for an industry that is fundamentally export-oriented, a situation some committee members termed "indirect energy export."

Furthermore, the timeline for new gas exploration tenders has been pushed back. The competitive process for new exploration rights, initially set for November, has been postponed to January 2027, with winners to be announced in May 2027. This delay, compounded by previous postponements due to the war, affects the exploration timeline, with seismic surveys expected to begin only in late September and actual drilling decisions to follow. The committee is also preparing contingency plans for a post-gas era, including the development of liquefied natural gas (LNG) import infrastructure, based on recommendations from the consulting firm Sheldor.