In September 2014, Afek Oil and Gas, a subsidiary of the U.S.-based Genie Energy, won the Israeli government's approval for oil drilling on 153 square miles of the Golan Heights.
The area, once Syrian territory, was occupied by Israel during the 1967 war and annexed in 1981.
Oil drilling will being in two weeks as necessary equipment has arrived at the Golan Heights, the official Syrian news agency reported on Jan. 1, 2015.
The move sparked criticism of Israel as the annexation of Golan Heights into Israeli territory is not internationally recognized.
UN Security Council Resolution 242, adopted following the 1967 war, establishes principles for setting Israeli borders and withdrawal from territories conquered in 1967, including the Golan Heights.
Most Israelis consider it their territory because it was annexed in 1981, said Professor Eyal Zisser, a Syria expert and Dean of the Tel Aviv University Faculty of Social Sciences, adding, "Only few remember that it was once Syrian."
The Syrian civil war also prevents Damascus from protesting and the international community is focusing on the Palestinian-Israeli conflict, Zisser said.
Dr. Alon Liel, former director general of the Ministry of Foreign Affairs and Israeli charge d’affairs in Turkey, said it is not a big issue in Israel and was not widely covered by the press.
"From the little I saw, the considerations were mostly professional -- meaning what is the chance to find oil there," he added.
Commenting on the legal debate as the Golan Heights is occupied territory, Liel said: "I do not think there is any one in Israel who thinks at the moment that Israel will withdraw from the Golan Heights, at least as long as Assad is in power and Syria practically does not exist as a coherent country."
The Golan Heights, housing the Lake Tiberias, is also Israel's main water source.
Israel also discovered two natural gas fields near Haifa; the Tamar field which is an estimated 280 billion cubic meters, and the bigger Leviathan, an estimated 530 billion cubic meters. Tamar started production in March, while Leviathan is due to start operating in 2016 or 2017.
New rules on natural resources
Meanwhile, new regulation of Israel's natural gas and mining industries aimed at increasing competition to bring down prices is scaring off investors, putting billions of dollars at risk.
The rules, introduced over five years for many sectors but hitting natural resource companies particularly hard, allow the break up powerful conglomerates that dominate Israel's economy, with the goal of reducing high living costs, a major voter complaint ahead of the March 17 national election.
But investor concern intensified in late December when the antitrust authority declared that stakeholders in two large natural gas fields -- Israel's Delek Group and Texas-based Noble Energy -- might be running a monopoly under the new rules and could be forced to sell assets.
"As long as there is no certainty regarding the regulatory environment it will be almost mission impossible for international quality investors to invest here because so many parameters can change," said Edouard Cukierman, chairman of Cukierman Investment House, who has raised $5 billion in investments in Israeli companies.
Noble and Delek are the largest stakeholders in Israel's two main gas fields - Tamar, which began production in 2013, and Leviathan, the world's largest offshore gas discovery of the past decade, which they hoped to bring online in 2018.
Together the companies say they have invested about $6 billion in Israel and they had planned to spend another $6.5 billion to develop Leviathan.
Any delay in developing the field could jeopardize those deals and also threatens a major domestic source of fuel, potentially sending prices higher.
Other companies have also been put off by the new approach.
Israel Chemicals which has a monopoly on Dead Sea mining said it would cancel investments after a Finance Ministry panel in October proposed reversing a previous understanding and increasing taxes on minerals.
The canceled investments are worth 2.5 billion shekels ($630 million) and the company said it would reevaluate another 3.5 billion shekels, divert investment to other parts of the world, close its magnesium plant and accelerate efficiency plans at plants in Israel.
The wave of regulatory changes began in 2010, shortly after Tamar and Leviathan were discovered, and has been extended into mined resources. Other sectors, such as telecoms and food production, have also been affected.
Israeli authorities estimate 10 large groups control 40 percent of the market value of all listed companies and want to introduce more competition to bring down the cost of goods.
The eastern Mediterranean natural gas discoveries caught Israel by surprise in 2009 and 2010. To ensure the public got a share of the windfall, it changed its tax and royalty policy, raising it to a level similar to one in developed countries.
It plans to raise taxes for mining as well.
The government then capped how much gas could be sold abroad, further upsetting exploration companies who argue that exports are needed to justify big investments since Israel is such a small market.
Should the group be forced to sell its stake in either the Tamar or Leviathan fields, finding a buyer might be difficult given the current environment of uncertainty, said one senior energy executive in Israel.
A compromise might enable the companies to hold on to those fields but sell two smaller fields under their ownership, the executive said. The companies could then sell gas separately, adding an element of competition, or a government company could be formed to buy domestic gas, keeping costs down.