Globes: Bureaucracy blocks the gas

In the past five years, gas reserves have been discovered in Israel that should be sufficient for local consumption for decades and provide energy at as low as a third of the cost of fuels like fuel oil and diesel. But not everyone is benefitting from the gas revolution. Of 2,000 Israeli factories that could switch to natural gas and reduce their production costs, only eight are currently connected to the natural gas supply.

In 2013, even before the gas started to flow from the Tamar reserve, state-controlled Israel Natural Gas Lines networked Israel with gas pipelines that would transport the gas from the reserve to the coast, and from there to all parts of the country. The biggest gas consumers, Israel Electric Corporation, private power producers, and energy intensive plants, are connected to this pipeline network. Since the high pressure in the network does not allow most factories to connect to it, the Ministry of National Infrastructures, Energy and Water decided that another network should be connected to it, at lower pressure, to which factories would hook up. This is the distribution network, for which a different company is responsible in each area of Israel.

Connecting to the gas distribution network obliges factories to adapt their existing fuel supply piping to natural gas, a conversion that costs, on average, over one million shekels. A reduction of at least 60% in future energy costs, alongside government grants, is supposed to lead to payback of the investment within two years. That at least is what senior people in the gas industry and dozens of factories that have already begun the process of conversion to gas thought. The reality, however, is that the gas is stuck in the bureaucratic pipeline.

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