Treasury proposes severe restrictions on gas exports

In the context of the Economic Arrangements Bill to accompany the 2026 budget, the Ministry of Finance has published a series of proposals for restricting the export of gas and for boosting competition in the gas market within Israel. Under the proposals, the daily quantity exported will be reduced such that 15% of domestic demand will remain in the ground for future use. In addition, exports will be restricted further if steps such as the construction of infrastructure for the import and storage of gas are not completed. The Ministry of Energy and Infrastructure objects, and argues that in effect this is an attempt to circumvent the recommendations of the Dayan committee, on which the Ministry of Finance’s stance was in the minority.

The most dramatic restriction proposed by the Ministry of Finance is keeping 15% of domestic demand in the ground, and deferring the use of it to the future. This restriction will be divided between the gas reservoirs in accordance with their contracts in the local market, such that the players in the gas market will have to choose between signing a contract in the local market and keeping the gas in the ground for the future, and they will have to compete with one another for this right.

According to the Ministry of Finance, the incentive is currently the reverse: a gas producer that signs export agreements can benefit from a higher price, and sell less in Israel, where there is an effort to maintain low prices. More than anything, this was manifest in the collapse of Israel Electric Corporation’s (IEC) deal with the Tamar reservoir, where the Tamar partners felt that in practice they were the sole player vis-à-vis IEC and could demand any price.

The Ministry of Finance continues to insist on an obligation to maintain a supply of gas for the domestic market of 510 BCM, and not 440 BCM as recommended by the Dayan committee (chaired by Ministry of Energy and Infrastructure director general Yossi Dayan). As a compromise, however, the Ministry of Finance proposes agreeing to the Ministry of Energy and Infrastructure’s smaller reserve, if all the promises given to the Dayan committee are kept, including gas import and storage installations that will make it possible to increase competition through overseas players and secondary trading between power plants.

The Ministry of Finance and the Ministry of Energy and Infrastructure have been in conflict for some time in the context of the Dayan committee. They agree that a competitive market should be maintained with a low price of gas for local consumption (chiefly for electric power production), which directly impacts the cost of living in Israel. The also agree on the importance of gas exports, which generate billions of shekels annually, most of which is collected in taxation, encourage further gas exploration, and give Israel leverage over countries of the region, headed by Egypt. The gap between them is over the balance between the two. The Ministry of Energy and Infrastructure’s stance won a majority on the Dayan committee. The Ministry of Finance is now trying to advance its position through the Economic Arrangements Bill.

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The Ministry of Energy and Infrastructure stated in response: “The stance of the Ministry of Energy and Infrastructure on natural gas was presented in the framework of the draft report of the Dayan committee that was published a while ago for public scrutiny. The Dayan committee continues its deliberations following the comments that have been received, and it is due to conclude its work and publish a final report shortly.

“The stance of the Ministry of Finance was not presented to the committee members and was not discussed in the committee. The Ministry of Energy and Infrastructure takes the view that it would be correct to conclude the committee’s deliberations and public a final report on which its members are agreed.

“It should be made clear that the Ministry of Energy and Infrastructure acts to advance Israel’s energy market, to maintain it as an attractive place for investment and development, for the good of the citizens of Israel.”

Published by Globes, Israel business news – en.globes.co.il – on November 9, 2025.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.