State auditor warns Israel may lose energy independence

State Comptroller Matanyahu Englman warned in a report published Wednesday morning that Israel could lose its energy independence. He said current natural gas reserves may not be enough to meet domestic demand in the future, and Israel could be forced to import natural gas within 22 years. Englman criticized the state for failing to expand the gas reserved for the local economy despite a large increase in discovered reserves. In 2024, 49% of the natural gas produced in Israel was exported to Egypt and Jordan, even though gas supplies about 70% of the country’s electricity.

The report said the Energy Ministry still lacks a long-term policy to secure domestic needs, there is no master plan for the energy system or gas storage infrastructure, and the Dayan Committee work meant to update gas policy has been delayed for about two years. Englman urged the government to quickly finalize policy, safeguard local supply, and prepare now for the day when Israel’s gas reserves decline. He also said Israel is not ready for the planned closure of oil refineries in Haifa Bay and may face a cooking gas shortage.

According to the findings, the LPG market is expected to rely much more on imports after the Bazan refinery in Haifa closes in 2030. Today, about 63% of LPG is produced in Israel, but after the closure imports are expected to jump to about 82% of local consumption. The state has only one maritime LPG import terminal and storage capacity for just three winter days of consumption, while infrastructure for imports and storage is far behind schedule. The report also found a concentrated household LPG market, with four large companies controlling most of it, significant price gaps between nearby cities and even within the same city, and limited enforcement against illegal gas activity and smuggling of gas cylinders from Judea and Samaria.

The report also identified major failures in the construction of new generating units 70 and 80 at Israel Electric Corporation’s Orot Rabin station in Hadera. Their launch was delayed by nearly three years, and construction took more than five years, more than twice the original plan. Englman said the delays stemmed partly from unrealistic scheduling, poor risk management, the pandemic, the war, and insufficient supervision by the Energy Ministry and the Electricity Authority. He estimated the damage to the economy at at least 4.6 billion shekels, including higher electricity-generation costs, environmental harm, and project overruns; project costs rose to about 4 billion shekels and financing costs increased by about 278 million shekels. The company also built units with higher capacity than government approval allowed, and that deviation was only approved after the fact.