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Israeli oil, gas, and petrochemicals

Hydrocarbon Engineering,

Oil and gas

Israel’s finance ministry has approved a taxation model for natural gas exports, BMI has reported. This is a key development in the country’s hydrocarbon future as the tax is set to take a netback model and will also include an additional mechanism to guarantee that the price of exported gas is not lower than the average price on Israel’s domestic market. Israel has also reportedly managed to secure its first small scale gas export sales agreements, finalising a deal with companies from the Palestinian Authority and Jordan. Further letters of intent have also been signed with Jordan and Egypt.


BMI has said that increasing exports in Israel will underpin a relatively bullish medium term outlook that will support growth in the petrochemicals industry and overcome a weak patch seen last year. In the first seven months of 2014, domestic rubber and plastic production declined 1.5% year on year but there were improvements on the performance seen in Q1. Petroleum and chemical products output also declined 3% over the period, although the rate of decline had moderated in recent months.

According to BMI the above mentioned declines were in line with reduced economic performance that was significantly influenced by the government’s conflict with Hamas and GDP growth of 2.5% is expected in 2014. When it comes to the positive, slow growth in the market isn’t likely to last long with GDP growth of 3.6% expected this year, helping to buoy petrochemicals consumption. Consumer confidence in the country is also expected to pick up this year, inline with BMI’s view that an improved macroeconomic environment will lead to increased consumer spending. BMI has also said that a moderation of austerity policies coupled with increasing exports will support output.

Last year, Israel’s petrochemical industry included capacities of 450 000 tpy of ethylene, 345 000 tpy of propylene, 125 000 tpy of benzene, 230 000 tpy of xylenes, 165 000 tpy of polyethylene, 450 000 tpy og polypropylene, 160 000 tpy of PVC and 60 000 tpy of methanol. BMI has said that it does not see any substantial increase in capacities up to 2019 and there are no plans for any new petrochemicals plants over the medium term.

Edited from report briefs by Claira Lloyd

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