Bazan CEO: "Closing the refinery before October 7th was a concept; now it is a populist obsession"
Rafael Maman, CEO of Bazan, stated that relying solely on fuel imports is utopian for Israel, emphasizing that the country must maintain independent refining capabilities given current security realities.
"The concept of relying exclusively on imports is utopian at best. The last thing I would want as an Israeli citizen in an emergency is to be dependent on Erdogan's mood in Turkey to provide fuel for the country," said Rafael Maman, CEO of Bazan, in a conversation with Roi Bergman, deputy economic editor of Calcalist, at the Calcalist and Discount Energy Conference.
How are geopolitical tensions and the surge in oil prices currently affecting the refined products and fuel market?
"The real crisis today is not a shortage of crude oil, but a shortage of refined products. There is currently a massive release of strategic reserves, so there is no shortage of crude oil in the world, but the price of refined products is rising for other reasons. The most significant geopolitical event in this context is happening in Ukraine and Russia: the Ukrainians are successfully hitting Russian refineries and have reduced almost 50% of the production capacity of Russia, which is a huge exporter of refined products. At the same time, China has stopped its exports. These two events have removed about 7 million barrels from the market and put it under pressure. In addition, global refining capacity is gradually decreasing in the face of demand. The result is that energy companies with exposure to refining, such as Exxon, Chevron, and also Bazan, are now recording their highest valuations."
Where does the government plan to close the refineries and relocate them currently stand?
"On paper, the government decision from 2022 stating that Bazan must be closed is still in effect. However, the decision states that the closure will take place five years after a set of infrastructural prerequisites is met — and this work has not yet begun. Closing Bazan before October 7th was a concept. Since then, it has been a populist obsession. Over the last three years, the understanding has taken root among professional echelons and decision-makers that Israel must have independent refining capabilities."
Does this mean that the closure will take place in 2029?
"No, and therefore framing the timelines is irrelevant right now. As mentioned, the five-year count will only begin after those preliminary infrastructure works are completed."
As an expert in the field, is it even possible for Israel to rely solely on the import of refined products?
"With full responsibility: the answer is no. The concept of relying exclusively on imports is utopian at best. While an island nation like New Zealand could afford to close its refinery and switch to imports, our security and geopolitical reality is completely different. The last thing I would want as an Israeli citizen in an emergency is to be dependent on Erdogan's mood in Turkey to provide fuel for the country."
Did you really demand in a letter to the government compensation of about 5 billion dollars in case of closure?
"That was not the statement. In the letter, we clarified the economic reality: the previous valuation of Bazan, before the energy crisis, stood at 3.2 to 3.7 billion dollars. We explained that, as in any energy company, since profits have risen significantly in the last year, the company's value has jumped accordingly. We simply pointed out that this is an excellent time to hold refining assets, and this is reflected in the value of Bazan."
What is the state of the refineries today after the direct hits they recently experienced?
"The refinery is currently working at full capacity and in excellent condition. We did experience two hits, but thanks to the hard work of our employees, who worked 24/7 in endless shifts, we managed to return to full operation within just 11 days in the first case. I am very proud of our teams for this achievement."
Can the state rely on one refinery in a threatened area, or is there a need to develop more?
"Ideally, redundancy of several refineries in Israel would be great, and could even turn us into a significant exporter of refined products. However, on a realistic level, I do not think new refineries will be built here. Regarding the location of the refinery in the Haifa metropolis — we have repeatedly proven that the recent hits did not pose a danger to the city or the environment. The incidents are completely contained within the refinery area and we know how to overcome them quickly."
