Israel's Energy Ministry Recommends Relocating Haifa Oil Refinery South

Israel's Ministry of Energy has unveiled a comprehensive strategic plan through 2040, recommending the relocation of the Bazan oil refinery complex from Haifa Bay to southern Israel. The plan, developed by BDO for the ministry, aims to bolster Israel's energy security in light of recent geopolitical tensions and conflicts. The ministry emphasizes that relying solely on imported refined products poses an excessive risk to national energy security, making independent refining capabilities crucial.

The economic analysis estimates the cost of relocating Bazan and establishing a new hybrid refinery in the south at approximately $5 to $6 billion. This initiative is proposed to be funded by anticipated carbon taxes, estimated at around $9 billion, rather than through closure compensation. The new facility is envisioned to produce future fuels, including biodiesel and sustainable aviation fuel (SAF).

In addition to relocating the refinery, the plan includes increasing operational emergency fuel reserves, expanding transmission and storage infrastructure, and strengthening fuel entry points at ports to prevent supply chain disruptions from single points of failure. Energy and Infrastructure Minister Eli Cohen stated that the energy sector performed well during the recent war despite damage to strategic facilities, and the plan will ensure continued energy security for decades to come.

Bat Sheva Azrieli Abuhazira, Director of the Fuel and Gas Administration, described the move as a significant turning point, establishing a long-term strategic foundation to meet the country's needs until 2040 and build necessary resilience. An inter-ministerial team is currently being convened to explore the establishment of a "Fuel Authority" to advance the plan's implementation.