Israel Charts Ambitious Energy Strategy Centered on Natural Gas

Israel is embarking on a significant energy transformation, aiming to leverage its natural gas reserves as the cornerstone of its energy system for decades to come. The new national strategy, developed by an inter-agency commission and presented after delays due to the war and inter-governmental disagreements, prioritizes securing domestic gas supplies until at least 2050 while simultaneously expanding export capabilities and exploring new fields. This policy shift is expected to impact electricity prices, energy security, and the nation's self-sufficiency during crises.

The updated strategy guarantees the domestic market sufficient natural gas for 25 years, balancing this with export potential. Current production is dominated by the Tamar, Leviathan, and Karish offshore fields, with the Katlan field slated to begin operations in 2027. Diversifying production sources is crucial for Israel's energy security, reducing reliance on a few large offshore platforms.

Natural gas has already become a major revenue source for Israel, generating approximately 30 billion shekels to date, with projections of up to 300 billion shekels in the long term. A significant export deal with Egypt alone is expected to bring in over 50 billion shekels. Israel primarily exports to Egypt and Jordan, with Egypt's infrastructure enabling further LNG exports to the global market, positioning Israeli fields as key regional energy assets.

For consumers, the availability of domestic gas has helped keep electricity costs lower than the OECD average, estimated by Energy Minister Eli Cohen to be about 18% less. However, final electricity tariffs are influenced by infrastructure costs, taxes, and regulatory frameworks, meaning new fields primarily create conditions for cost containment rather than automatic bill reductions.

Looking ahead, Israel anticipates a surge in electricity demand from data centers, aiming to attract international tech companies to build facilities requiring 1 to 3 GW of power. This presents a dual opportunity: attracting investment in cloud services and AI through stable energy, and creating jobs. However, it also necessitates significant increases in power generation capacity and grid infrastructure to meet this demand.

The strategy also includes continued exploration for new gas reserves, with an ongoing tender for offshore exploration attracting interest from international companies like Chevron and BP. Deep-water drilling is a key focus, with potential for oil discovery also being assessed, which would be particularly significant given Israel's greater reliance on oil imports. Concurrently, the government is exploring nuclear energy as a long-term supplementary option, with a dedicated commission established to study its advancement.