The Ministry of Energy recommends relocating the Bazan factory from Haifa to the south of the country
The government ministry's recommendation is published in accordance with the State Comptroller's recommendation to maintain refining capabilities in Israel
The Ministry of Energy and Infrastructure published on Monday a recommendation to relocate the Bazan plant from Haifa to the south of the country, as part of a plan to strengthen Israel's energy security. The recommendation is being published in accordance with the State Comptroller's recommendation to retain refining capabilities in Israel.
This is part of a comprehensive strategic work plan for shaping Israel's fuel sector until 2040. One of the main conclusions arising from it is that the fuel sector will continue to be a vital infrastructure for the Israeli economy in the coming decades, alongside the accelerated transition to electric transportation and renewable energies.
Liquid fuels will continue to serve transportation, aviation, industry, the defense system, and emergency services. In addition, they will serve as backup for the electricity sector in case of shortage or disruption in the supply of natural gas.
The ministry noted that the study indicates that importing crude oil, alongside local refining capabilities, provides Israel with flexibility in producing its fuel mix, according to the needs of the economy and the security system. It also reduces dependence on the availability of certain products in the global market.
As such, there is a recommendation to preserve Israel’s refining capabilities while carrying out the relocation and redevelopment (“evacuation and construction”) of Bazan from the north to the south.
The study also points to a significant change in the economic viability of the move compared to previous estimates. The analysis indicates that instead of compensating Bazan and shutting down refining capacity, it is possible to keep the financial resources within the Israeli energy sector and use the expected revenues from the carbon tax as a source of funding.
According to the study, the relocation cost is estimated at about five to six billion dollars, while the present value of the state's carbon tax revenues is estimated at around nine billion dollars.
The plan proposes a series of complementary measures designed to prevent a situation in which a failure at one point in the supply chain harms the ability to supply fuel to the economy. Among other things, it is recommended to establish inventory and storage policies in accordance with international standards, expand fuel transportation infrastructure, strengthen LPG unloading and storage infrastructure, and increase connectivity by developing additional entry points to the Israeli fuel sector.
The goal is to ensure that the State of Israel will have enough fuel alternatives in the event of a security incident and/or a significant crisis in the global supply chain. The Ministry of Energy and Infrastructure emphasizes that the work serves as a basis for formulating fuel sector policy for the coming years.