The Israel Tax Authority has announced revised upwards the revenue forecast from royalties on gas and oil profits, following an upward revision of the gas reserves in the Leviathan reservoir and the discovery by Energean (LSE: ENOG; TASE: ENOG) of the small Katlan offshore field.
The current forecast sees the wealth fund receiving $57 to $74 billion over the years, compared with the previous forecast of $55 to $72 billion in 2024. In the coming decade alone, the fund is expected to bring in between $19 and $23 billion. These are just the revenues for the wealth fund, while the state also benefits from the gas reserves through the regular levies on natural resources, as well as from the profits of the gas field partners.
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The wealth fund, officially called the Citizens of Israel Fund, is Israel’s national wealth fund, which is used to accrue some of the revenues that the state collects from the gas partnerships in exchange for the production and sale of gas reserves in Israel’s economic waters.
Unlike the regular levy that goes directly to the state coffers, the wealth fund contains the “Sheshinsky tax,” which is collected from companies once they have passed a profit threshold that is supposed to cover their investments. So far, only the Tamar reservoir has paid the royalties, and will soon be joined by the export-oriented Leviathan reservoir and the smaller Karish reservoir, which is being used only for the domestic economy.
A jump in revenue
This is expected to lead to a jump in the fund’s revenue. According to the latest estimate, at least $290 million will enter the fund in 2025, an amount that will almost double to $550 million in 2026, and double again to $1.2 billion in 2027. The maximum estimate for that year is $1.9 billion. Revenue is expected to peak in 2031, when the fund will bring in between $2.7 and $3.1 billion. After that, unless new gas reserves are found, revenues will gradually fall until the gas reserves are depleted.
According to the law, the fund began its operations as soon as it accumulated NIS 1 billion, which occurred in 2022. It will be possible to withdraw 3.5% of the assets accumulated in it each year for purposes such as investment in renewable energy and employment in the Negev. After the eighth year of operations, which will be in 2030, it will also be possible to withdraw profits from the fund.
One of the fund’s aims is to prevent spending the large amounts collected all at once, which would cause “Dutch disease” – over-strengthening the local currency and hampering export industries, while government gets used to the large but temporary revenue from the gas reserves.
Published by Globes, Israel business news – en.globes.co.il – on July 3, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
