Israel Reduces Gas Exports as Tamar Field Closes

JERUSALEM, Nov 2 (Reuters) - Israel is exporting 70% less natural gas since it shut down its Tamar field, with the economic toll of the closure about 800 million shekels ($201 million) a month, according to a report by accounting and consulting firm BDO Israel.

The report was commissioned by the Tamar partners - which include Chevron and Isramco - and was also presented to Israel's National Security Council, said Chen Herzog, chief economist at BDO Israel.

Tamar is Israel's second largest offshore field, supplying 8.7 billion cubic meters (bcm) of gas to the Israeli market last year, with another 1.57 bcm exported to Egypt and Jordan. Its largest field, Leviathan, is mostly earmarked for exports.

Israel suspended production at Tamar on Oct. 9, shortly after fighting escalated with the Islamist group Hamas in Gaza. Supplies were redirected through a pipeline in Jordan, rather than a direct subsea pipeline to Egypt.

To make up for the loss from Tamar, Israel has turned to more costly fuel sources and also diverted gas normally exported from Leviathan to the local market, industry sources say.

This resulted in a 35% decline in weekly gas production and a 70% drop in exports, as well as the overall 800 million shekel monthly hit, according to the BDO report.

"In the event of escalation of the war that will result in further reduction of Israel's gas production, the economic cost will dramatically increase as it will require Israel not only to reduce exports, but also to shift local electricity generation to costly coal and diesel," Herzog told Reuters.

Israel's Energy Ministry said it was not familiar with the BDO report and so could not comment on it.

A spokesperson for Chevron said it is "focused on the safe and reliable supply of natural gas for the benefit of the Israeli domestic market and regional customers."

"We continue to supply customers in Israel and in the region from the Leviathan production platform. Beyond this it is not Chevron policy to comment on commercial matters," the spokesperson said.

($1 = 3.9638 shekels)

(Reporting by Ari Rabinovitch; Editing by Jan Harvey)

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