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Israel's US$10b island project sparks European interest

Tel Aviv

AT LEAST two Benelux companies have dispatched representatives to Israel in recent weeks to discuss a project to develop an airport offshore in the Mediterranean.

Jan de Nul Group of Luxembourg and Belgium's Dredging Environmental & Marine Engineering NV (DEME) have sent senior employees to discuss the project, according to Avi Simhon, head of the National Economic Council in the Israeli Prime Minister's Office. Mr Simhon estimated the project could cost about US$10 billion and take 10-15 years to build.

Israel's fast-growing economy is limited by a scarcity of land for infrastructure, especially in the centre of the country. Israel currently has only one major airport serving a booming tourism industry and a population eager to travel abroad. Earlier this year, the government formed a committee, headed by Mr Simhon, to look into moving infrastructure projects or building new facilities on artificial islands.

"These plans have been under consideration for many years here, and now it's a matter of finally moving things forward," Mr Simhon said in an interview in Jerusalem. "We can't sit around and do nothing while Ben-Gurion Airport reaches overcapacity." A spokeswoman for DEME Group declined to comment.

"We are aware of this possible project," Heleen Schellinck, spokeswoman for Jan De Nul, said in an emailed response. "Once the tender is published, we will have a look at the project specifications."

Building artificial islands would involve technical and environmental challenges. The companies interested in the project all have experience with dredging and land reclamation, critical issues for developing infrastructure in the low-lying Benelux countries. Offshore airports have been built before - notably in Japan, where Kansai International Airport was built in Osaka Bay for about US$20 billion and now serves more than 25 million people a year.

The Israeli government approved plans to build two artificial islands off the country's shores as far back as 2002, and again in 2012. Neither of the ideas ever moved forward.

Last year, the Israel Airports Authority unveiled a US$1.4 billion plan to upgrade Ben-Gurion International Airport to meet an expected increase in activity. Total passenger traffic is expected to reach 24 million people this year, according to IAA forecasts, a 70 per cent jump since 2013, when the country approved the Open Skies Agreement and let low-cost airlines compete for business.

"Land in Israel is becoming more rare and more expensive," said Nati Birenboim, chief executive officer of Tamuz Group, which advises global firms on large infrastructure projects in Israel. "A state-of-the-art international airport on an artificial island, that's close to the heart of the country, would help alleviate the problems that Israel is certain to face." BLOOMBERG

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