Israel's Energy Ministry Recommends Relocating Haifa Oil Refinery South
Israel's Ministry of Energy and Infrastructure has recommended relocating the Bazan oil refinery from Haifa to southern Israel as part of a plan to strengthen the nation's energy security. This recommendation aligns with the State Comptroller's call to maintain domestic refining capabilities.
The move is a key component of a strategic work plan designed to shape Israel's fuel market until 2040. The plan acknowledges that liquid fuels will remain essential for transportation, aviation, industry, defense, and emergency services for decades, even with the accelerated transition to electric vehicles and renewable energy. These fuels will also serve as a backup for the electricity grid during natural gas supply disruptions.
The ministry emphasized that importing crude oil and maintaining local refining capacity provides Israel with flexibility in producing its fuel supply, reducing dependence on global market availability, and meeting the needs of the economy and security apparatus. The proposal involves redeveloping the existing Bazan site in northern Israel and establishing a new hybrid refinery in the south, capable of producing future fuels like sustainable aviation fuel (SAF) and biodiesel.
Analysis within the plan suggests the relocation is financially viable. Instead of compensating Bazan for closure, the expected revenues from carbon taxes, estimated at $9 billion, could fund the relocation and construction of the new refinery, which is projected to cost between $5 to $6 billion. The plan also includes measures to enhance supply chain resilience, such as adhering to international inventory standards, expanding fuel transport infrastructure, strengthening LPG storage, and developing additional entry points for the fuel market.
Bat-Sheva Azrieli Abuhazira, Director of the Fuel and Gas Administration at the Ministry of Energy, stated that this initiative lays the groundwork for a long-term strategic energy infrastructure, ensuring the economy's resilience and redundancy for decades to come. An inter-ministerial team is being convened to establish a dedicated fuel authority to expedite the plan's implementation and ensure long-term systemic responsibility for Israel's fuel market.
