Natural gas plan faces delay

Israel's plan to begin production from its new offshore natural gas field by 2012 hit a snag after cabinet ministers did not provide funds for a survey into the location of a terminal, officials said on Sunday.

A two-year budget passed by Israel's cabinet on Friday had sweeping cuts and did not allocate NIS 25 million ($6.5 million) the Infrastructure Ministry requested for a crucial study to determine the spot of a receiving terminal.

"A final schedule for the study on the offshore alternative has not yet been reached, but it seems that such a study will take more than a year," the ministry said in a statement.

The ministry was moving ahead with plans to issue a tender for conducting the study, but the failure to allocate funds casts further doubt on whether the consortium that owns Tamar will reach the target production date of 2012.

The study will include the option of an offshore gas receiving terminal along with seven onshore locations to choose from, a ministry official said.

The onshore options have met with stiff resistance from local residents who fear for their safety.

The Infrastructure Ministry warned the timetable will have an immediate and significant impact on Israel's energy market.

US-based Noble Energy leads the consortium that includes a number of Israeli partners and said last month the project was on schedule. The group raised its reserve estimate at the Tamar field by 15% to 8.4 trillion cubic feet (238 billion cubic meters).

Noble owns 36% of Tamar while Isramco Negev owns 28.75% and Delek Group has a 31% stake through two units that have equal shares – Avner Oil Exploration and Delek Drilling.

Israel's budget still needs approval by parliament in three votes.

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