Bloomberg News

Israel May Need Foreign Investors to Develop Natural Gas Fields

July 04, 2012

Israel may need foreign investors to finance the development of natural-gas fields off its shores, according to Standard & Poor’s Maalot.

“The volume of financing needed for the development of the natural-gas industry in Israel may require the entry of foreign investors and the use of global financing tools in addition to local financing,” Ronit Harel Ben-Zeev, Standard & Poor’s Maalot chief executive officer, said today at a conference in Tel Aviv.

A series of discoveries has given Israel the opportunity to become a gas exporter. The Tamar and Dalit gas fields are due to start output next year and are big enough to supply the country with gas for two decades. The larger Leviathan field holds more than the U.K.’s reserves. Drilling costs will total about $2 billion in the coming two years, according to figures from the Ministry of Energy and Water Resources presented at the conference.

“Foreign investors have internalized that the findings here are not just a fleeting episode but that this is a market with potential,” Ohad Marani, CEO of Israel Land Development Co. Energy Ltd. said at the conference. “To further attract their attention we must turn to exports.”

Boaz Schwartz, managing director and chief country officer of Deutsche Bank in Israel, which is financing the Tamar project, said that while foreign banks and foreign investors are happy to look at Israel, they are deterred by regulatory uncertainty, mainly regarding the country’s infrastructure development.

“If there was regulatory certainty, it would significantly ease the financing of these projects and the quantity of foreign investors would increase,” he said. “Disorder has a price.”

To contact the reporters on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net; Sharon Wrobel in Tel Aviv at swrobel4@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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