“We’re doing this very quietly, but it has a substantial influence on Israel’s economy,” said Shaul Zemach, chief executive of the Israeli subsidiary of Energean. The London-based natural gas firm brought the rig online last fall after a landmark maritime deal between Israel and Lebanon — a diplomatic breakthrough that included Hezbollah, the Iranian-backed militant group.
Speaking over the whirring din of machines, Zemach pointed at two steel pipes transporting fuel onto the rig for processing and export to the Israeli national grid — where gas accounts for more than 70 percent of its electricity.
Natural gas has transformed Israel, once a resource-poor nation, into a regional energy powerhouse. The discovery of significant offshore fields a decade ago has allowed the country to become largely self-sufficient, and has opened up lucrative export opportunities. Demand is especially high now, as European markets scramble to replace the Russian oil and gas imports disrupted by the war in Ukraine.
But Israel’s gas rush also coincides with a surge in regional tensions — from the West Bank to Lebanon — and an unprecedented domestic crisis, as the country is roiled by mass protests against the government’s contentious plan to weaken the Supreme Court.
After lawmakers pushed through the first phase of the judicial overhaul last month, the value of the shekel plummeted and Tel Aviv’s stock market tumbled. Bankers and business leaders warned of capital flight and Moody’s downgraded Israel’s sovereign credit rating, citing “a deterioration” of governance.
Prime Minister Benjamin Netanyahu has repeatedly dismissed warnings of a looming catastrophe, asserting that Israel has alternatives — including natural gas — to help it ride out the turmoil.
“We are increasing gas exports to Europe. We’ve opened bidding for tenders worth hundreds of billions for gas exploration in Israel,” he said Wednesday in a video posted on Twitter, recently renamed X. “Israel is becoming an energy superpower. … Who would have believed it?”
There are an estimated 1.75 trillion cubic feet of reserves in the Karish field alone; already, it produces 35 percent of the gas consumed by Israel. Zemach thinks there could be even more abundant wells further down, two to three kilometers (more than a mile) below the current extraction level.
But despite European demand, experts say Israel’s relatively nascent gas sector — expected to be worth $55 billion by 2064 — will comprise only a minor chunk of its economy for the foreseeable future.
“Netanyahu is trying to shift the attention to the gas sector and to the other resources that he says will help Israel’s economy,” said Eldad Ben Aharon, an expert on Israel’s foreign policy and a researcher at the Peace Research Institute Frankfurt. “But if we zoom out and we look at gas’s potential versus the deteriorating economy, it’s not convincing.”
There are no guarantees, he said, that the infrastructure and the multilevel regional cooperation required for drilling will keep pace with the forecasts. Even in a best-case scenario, he said, gas profits cannot begin to compensate for the economic damage caused by Netanyahu’s judicial overhaul — especially in Israel’s tech sector, which accounted for 54 percent of the country’s export market last year and more than one-tenth of its workforce.
Tech leaders have been at the forefront of street protests over the past seven months, chanting for Netanyahu to back down or risk lasting economic harm. Investments in tech firms have dropped 68 percent since the beginning of 2023, the lowest pace of investment since 2018, according to a report last month by the Start-Up Nation Policy Institute. Many Israeli-founded tech companies are moving their money and their employees abroad.
Natural gas exports are part of “Netanyahu’s multidimensional approach to ‘diversify’ the economy,” said Eran Etzion, the former head of planning in Israel’s Foreign Ministry. But the…
Read More: As economy stumbles over judicial push, Israel banks on an energy boom