Israel Records Record Royalties from Natural Gas and Minerals in 2024

Israel’s natural gas and minerals sectors have delivered impressive results in 2024, with the state collecting a record NIS 2.37 billion in royalties, a rise of 8.2% from the previous year. This increase highlights the growth of Israel’s energy resources and the key role they play in supporting the country’s economy.

The revenue from natural gas royalties alone amounted to NIS 2.31 billion, an increase of 10.88% compared to 2023, with significant contributions from the Tamar, Leviathan, and Karish reservoirs. The report from the Ministry of Energy and Infrastructure shows that these sectors remain critical to Israel’s financial stability, with almost NIS 30 billion in total royalties collected since gas production began.

The Tax Structure: Royalties, Companies Tax, and the Sheshinski Levy

Israel's local gas companies pay several taxes that benefit the country’s economy:

1. Royalties: A 12.5% rate on production, collected by the Royalties Division of the Ministry of Energy and Infrastructure.

2. Companies Tax: A 23% tax on profits, administered by the Israel Tax Authority.

3. Sheshinski Tax: A special levy on super-profits from natural resources, ranging from 20% to 46.8% on returns above a 150% investment threshold. This tax is transferred to Israel’s sovereign wealth fund, the Citizens of Israel Fund.

These taxes have not only generated significant revenues for the state treasury but have also contributed to Israel's sovereign wealth, positioning the country for continued economic resilience.

Growth in Gas Exports and Production

Key statistics from the 2024 report show positive trends:

- A 13.4% increase in natural gas exports to Egypt and Jordan.

- An 8.3% rise in total natural gas production.

- A 10.88% increase in royalties from natural gas and oil.

The growth in both production and exports underscores the strategic importance of natural gas for Israel’s energy future and its regional partnerships.

Tamar, Leviathan, and Karish Reservoir Contributions

The bulk of Israel’s royalties in 2024 came from the Tamar and Leviathan reservoirs.

- Leviathan: Generated NIS 1.022 billion from 11.33 BCM of natural gas production, with 87.5% of the royalties coming from exports.

- Tamar: Contributed NIS 779 million from 10.09 BCM of gas and 455,000 barrels of condensate, a 12% increase in royalties compared to 2023.

- Karish: Produced NIS 507 million, with most revenues stemming from local natural gas production.

Mineral Royalties Decline

Despite successes in the gas sector, the minerals industry experienced a decline. Revenues from mineral royalties fell to NIS 41.2 million, primarily due to a drop in phosphate prices. However, the Ministry of Energy and Infrastructure continued to generate revenue from phosphate rock exploration licenses, adding NIS 16 million to state coffers.

Minister of Energy and Infrastructure Eli Cohen expressed optimism about the figures, emphasizing that the rise in natural resource royalties is beneficial for Israel’s economy. He predicted that the state’s total income from natural gas would reach around NIS 10 billion annually in a few years.

“The significant increase in natural gas exports shows that this industry is a vital strategic asset for Israel,” Cohen said. “We aim to exploit these resources fully, attract more companies, and expand reserves for both the local market and export.”

Israel’s natural gas industry continues to grow, with the expectation that it will play a key role in both the local and regional economy. With the potential for increased competition and expanded reserves, the future looks promising for Israel’s energy sector and its citizens.