The Israeli National Planning Council approved plans for a floating LNG terminal off the coast of Hadera.
Israeli National Infrastructure Minister Uzi Landau has pressed for the terminal as part of a plan to deal with pending gas shortages and the frequent disruptions of Egyptian natural gas supplies.
A pipeline from Egypt has been sabotaged five times this year, disrupting supplies to Israel and Jordan.
"The approval of the project is crucial and will guarantee gas supplies to the local economy until the Tamar offshore field comes online," Landau was quoted by the Platts news service as saying.
Major natural gas discoveries at the Tamar and Leviathan offshore fields have redefined the Israeli energy sector. Officials in April said the country must find ways to become self-sufficient in energy.
The terminal should be online by the end of 2012. It will service the country's electricity company and serve as a backup for domestic natural gas supplies.
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