You must obviously have noticed that the issue of the gas outline has completely faded away from the media. It is not simply because the gas outline is in progress and de facto moving ahead (and successfully so with the sale of Karish and Tanin, the development of Leviathan, etc.); it is not only that the nature of hot subjects is one to cool down eventually; but it is also because the situation in the natural gas market (at least some of it) does not provide any legitimization to the opponents to come of their hole and to once again hold a festival of political rather than economically based parties.
I would like to remind readers, that the objections to the gas outline including the use of very severe expressions and utterances such as plunder, pillage, robbery and exploitation. The opponents of the gas outline often used these words in order to receive stormy applause for what they said was their courageous war on behalf of the public’s interests. Throughout the whole campaign one also heard calls and shouts of “danger to the Israeli democracy” which any day was about to crash and collapse, even disappear if their cries were not answered and listened to.
So here it is: the Israeli democracy is alive and kicking and remarkably so. It is clear to all that the objections and the demonstrations were totally political, despite attempts to blur this and to say “that it is not a matter of right or left”. Of course it is a matter of right or left, exactly like the objections to the faculty for medicine. It is the nature of opponents to paint every issue in black or white, anyone who doesn’t tow the line with them is turned into someone who is corrupt who takes bribes. I too had the “honor” and “the right” to be named as such a person. So here you have it, they too now have the opportunity to atone for their sins and to do some soul searching for the political campaign and the horrid echoes all this led to organized by them.
A short explanation on natural gas prices in the world: there is no such thing as one unique price that can be compared because each situation is different. The price is set regionally and in accordance with the manner that the gas is produced, transmitted, the price of alternative energy sources, the weather, whether the gas is liquefied, the rate of taxes, supply and demand of course other factors. The highest price from the table is using LNG, whilst at the lowest level of global pricing is the price in those countries that subsidize below costs, as well as US gas (Henry Hub) and Canada, where gas is mostly produced onshore and is associated gas.
The price trend during the debate on the gas outline played into the hands of the opponents: at the time the price of natural gas fell to a global low, in parallel with the low oil prices, and so an illusion was formed that the price of natural gas in Israel was “high”. However, relating to gas prices in 20-year gas contracts at any particular moment in time is simplistic and simply using the benefit of hindsight. The perspective in gas contracts and gas prices must be done over a much longer period.
So here we have it, two years have elapsed and lets see what happened to the price of gas in Europe (60% of which is imported which is also an important parameter). However, the issue of gas prices is complicated and as usual in those circumstances I asked the help of Gina Cohen, a lecturer at the Technion and the number one expert in Israel on natural gas (Gina: hmmm, to be taken with a pinch of salt). And thus, the average gas price per unit of energy in Europe (MMBtu) in 2016 was $4.6, in 2017 it had already increased to $6 and the average since the beginning of 2018 to date is $7.5. Namely the price has increased by close to 70% from the low point. Today the price in Europe is even above $9, a 100% increase from the low prices two years ago. To remind you, the average natural gas price in Israel is $5.5, and IPPs even pay less at $4.7. It is important though to point out that gas in Israel is not imported, it is mostly local, and is sourced from Tamar plus 3% of imported LNG.
The reason for the hike in gas prices in Europe are varied and stem from a number of reasons: the fierce cold last winter, which was dubbed “the beast from the east”, followed by the exceptional heat wave, which in turn had an effect on the energy sources that could be used, such as nuclear stations which had to generate less as the water was too hot to cool the furnaces, lower use of coal because the water levels were low and it became difficult to ship some of the coal combined with lower hydro and lower wind energy because of the heat wave and lack of rain, a hike in the price of oil over the last two years and a reduction in local gas production in Europe – mostly from Holland as an ongoing trend, combined with some local temporary issues in the UK and Norway. According to estimates, the prices in September and October may be somewhat more moderate before potentially increasing again towards the winter by the end of the years.
So the market conditions have changed, the prices in Europe have changed, and although we are not rushing like the opponents did to make populist comparisons and to set things in stone, the picture now seems quite different. So who exactly is corrupt and who is providing a distorted picture to the public?

Gina Cohen
Natural Gas Expert