Israel's revenues from natural gas royalties witnessed a substantial surge during the first half of 2023, reaching over NIS 1 billion. This marks a remarkable 23% increase compared to the same period in the previous year. reports the Natural Resources Administration at the Ministry of Energy.
A significant contributor to this impressive growth was the initiation of natural gas production from the Harish reservoir in October 2022. This addition not only led to a boost in gas production volumes by approximately 13%, with 12.32 billion cubic meters (BCM) produced in the first half of 2023 compared to 10.85 BCM during the corresponding period last year, but also played a role in driving up the revenues.
The favorable market dynamics were further aided by the devaluation of the Israeli shekel against the US dollar, as the prices for natural gas are set in dollars. This currency dynamic added to the increase in revenues, enhancing the financial gains for the state.
The report also sheds light on Israel's continued efforts to harness its natural resources for economic growth, with an eye on the global market. Amid ongoing discussions regarding the expansion of export permits for the Leviathan reservoir and the establishment of a team to review the country's natural gas export policy for 2023, the report's findings are timely.
The breakdown of the revenues underscores the significance of gas royalties in Israel's financial landscape. Out of the total revenues, royalties from exports accounted for NIS 590 million, constituting a significant portion of 58.6%. This emphasizes the nation's role as an emerging player in the global energy market.
When considering the broader context of natural resource revenue, which encompasses payments from quarries and various fees, the total royalties received by the state surged to NIS 1.044 billion. This marked an impressive growth of 25% compared to the first half of the previous year.
The Leviathan reservoir, known as Israel's largest natural gas reservoir boasting around 600 BCM in reserves, played a pivotal role in driving up revenues. It contributed approximately 46% of the overall gas revenue, amounting to NIS 482 million, a notable increase from the NIS 453 million recorded during the first half of 2022.
The Tamar reservoir, the second-largest of its kind in Israel, contributed about 36% of the total natural gas revenues, amounting to approximately NIS 379 million. The robust performance of these reservoirs underscores their crucial role in the country's economic growth.
The tax structure surrounding Israel's natural resources involves three main components: royalties collected by the Director of Natural Resources at a rate of 12.5% from the start of resource production, corporate tax at a rate of 23%, and the "Sheshinsky tax" on profits from natural resources, which is unique to the Tamar reservoir. The latter tax feeds into the Israeli wealth fund managed by the Bank of Israel, further benefiting the state's financial well-being.
The report also introduced data from the newly operational Shark reservoir, which commenced gas production in October 2022. Notably, revenues from the Shark reservoir reached NIS 145 million during the period under review.
This report comes as a testament to Israel's successful utilization of its natural gas reserves, contributing substantially to its economic growth and positioning it as a key player in the global energy market. As the nation navigates discussions around expanding its natural gas exports and optimizing its resource management, the future of Israel's energy sector appears promising.