Since 1998, Israels government has been working to reform the highly centralized Oil sector. Among other things, the process has ended the old cost-plus basis system, eliminated price controls for end users of Petroleum products, and created more competitive conditions in general. Israel has two major refineries, both owned and operated by Oil Refineries Limited (ORL). The plants, which are located at Haifa (130,000 bbl/d) and Ashdod (90,000 bbl/d), meet all of Israels demand for refined oil products. In December 2004, the ministerial privatization committee, headed by Minister of Finance Benyamin Netanyahu, approved a proposal to privatize and split ORL. The Ashdod refinery will be sold to private investors in the first stage. Immediately afterwards, the state will sell its 74 percent share in the company as Well as the 26 percent holding of the Israel Corporation in an issue on the Tel Aviv Stock Exchange, or through a private sale of blocks of shares in Israel or overseas. In December 2003, Israels Yam Thetis group signed an $8 million deal to supply Natural Gas to the Ashdod refinery.
Although Israel itself produces almost no oil, a comprehensive settlement of the Arab-Israeli conflict could affect Middle East oil flows significantly. Israels geographic location between the Arabian peninsula and the Mediterranean Sea offers the potential for an alternative oil export route for Persian Gulf oil to the West. At present, these oil exports must travel either by ship (through the Suez Canal or around the cape of Africa), by Pipeline from Iraq to Turkey (design capacity 1.5-1.6 MMBD), or via the Sumed (Suez-Mediterranean) Pipeline (capacity 2.5 MMBD).