construction of the southern segment of the natural gas pipeline

The Ministerial Committee on Socio-Economic Affairs headed by the Minister of Finance approved construction of the southern segment of the natural gas pipeline
 
The Ministerial Committee on Socio-Economic Affairs headed by Minister of Finance Benjamin Netanyahu approved construction last week (24/05/05) of the natural gas pipeline running from Kiryat Gat to Sdom.  The project will be carried out by Israel Natural Gas Lines Company ltd.
 
Pursuant to the decision, by 2007, natural gas will be available to the industrial sector and electricity producers based in southern Israel, with the aim of lowering costs to southern-based industries, allowing for the establishment of electricity generating power stations in the region, employing a technology combining cogeneration of electricity and thermal energy.
 
The decision was based on an economic feasibility study, carried out by the Budget Division of the Ministry of Finance and the Natural Gas Authority in the Ministry of National Infrastructures, which examined construction of the pipeline’s southern section.
 
The study’s findings indicated that establishing a natural gas pipeline of this type, from Kiryat Gat, via Beer Sheva, and terminating in Sdom would provide considerable benefits to the Israeli economy, primarily due to the conversion of factories from energy generation employing expensive fuels to the utilization of less expensive natural gas, but also due to the construction of electricity-generating power stations employing a technology combining cogeneration of electricity and thermal energy for use by factories in the southern region of the country.  The project has been estimated to offer potential savings to the economy of approximately $370 million. Construction of the system is expected to cost approximately $120 million. Moreover, there are additional anticipated benefits to the economy, including the encouragement of industry in peripheral regions, the relocation of plants from the central region of Israel to the Negev, environmental benefits, and the reduced transport of dangerous fuels via the road network.
 
Owing to the considerable economic benefits which the transition to natural gas entails, expectations are that the certainty regarding the construction of a pipeline system in the southern region of the country would result in the conclusion of gas supply contracts to consumers in the south, thereby adding new natural gas suppliers to the economy as a whole. Accordingly, government policy should avoid making construction of a southern pipeline system subject to additional contractual agreements for the supply of natural gas to the economy as a whole. This is particularly germane in light of the advanced stage of negotiations currently being conducted between Israel Electric Corp. and Egypt’s gas company regarding the supply of natural gas to the Israel Electric Corp. in addition to its existing contract with the Thetis Sea Group.