State-owned Israel Natural Gas Lines says the $140 million plant, to be constructed by Italian marine contractor Micoperi, will have the capacity to handle 87.25 billion cubic feet of gas a year when it's completed by the end of 2012.
Israel's discovery of massive gas fields in its exclusive economic zone in the eastern Mediterranean in 2009-10 triggered a chain reaction of disputes across a region that until then had been resource-poor.
Now many regional states are scrapping over some 122 trillion cubic feet of gas, plus some 4 billion barrels of oil, that the U.S. Geological Survey says lies under the Levant Basin. That encompasses area claimed by Israel, Syria, Lebanon, the Gaza Strip, Egypt and Cyprus.
Lebanon has claimed part of the largest Israeli gas field, Leviathan with reserves of 16 trillion cubic feet, lies in its territorial waters. It has vowed to prevent Israel from "looting" Lebanese assets.
Israel, still technically at war with its neighbor, has threatened to use force if the Lebanese try to seize the gas.
The gas fields have assumed a greater importance for Israel since the February downfall of Egyptian President Hosni Mubarak during a pro-democracy uprising.
The demise of Mubarak, who upheld Egypt's landmark 1979 peace treaty with Israel, has allowed widespread opposition to Israel among its 80 million people to come to the fore. That led to Egypt cutting off gas exports to Israel, which accounted for 40 percent of the Jewish state's gas requirements.
The new regime in Cairo says Mubarak sold Israel the gas at rock-bottom prices and a hefty price increase is expected to be announced soon.
With the need to utilize the newfound gas fields as quickly as possible, Israeli Prime Minister Binyamin Netanyahu's government has ordered energy companies involved in the offshore gas exploration to speed up work and threatened to withdraw operating licenses if they don't.
Infrastructure Minister Uzi Landau said Monday Israel could face a critical shortage as early as the third quarter of 2012.
The planned terminal "is of the utmost strategic importance for the country's ability to ensure a continuous supply to its power stations and to safeguard its energy security," he declared.
Of the two main fields found, Tamar, containing 8.5 trillion cubic feet of gas, is expected to begin production in 2013. The larger Leviathan field, with 16 trillion fcf, isn't due to go onstream until 2017.
The Israelis are planning to expand their navy with more patrol craft to protect the highly vulnerable gas platforms and pipelines.
The threat doesn't come only from Lebanon's Iranian-backed Hezbollah organization, with which Israel fought a 34-day war in 2006, but possibly also from the naval forces of former strategic ally Turkey.
The Turks were incensed by the killing of nine of its citizens by Israeli naval commandoes May 31, 2010, during the interception of a flotilla of aid ships bound for the Israeli-blockaded Gaza Strip.
Ankara threatens to challenge Israeli vessels in the eastern Mediterranean and has also been caught up in Israel's cooperation with the nearby island of Cyprus in its drive to explore for gas fields believed to extend from Israel's continental shelf.
Israel and the Greek Cypriots plan to build joint export pipelines to Europe via Greece, cutting out Turkey, Greece's ancient adversary.
In September, Cyprus began exploring off its southern coast in what's seen as an extension of Israel's Leviathan field.
Cyprus has been divided since Turkey invaded in 1974. The Turks hold the northern one-third, known as the Turkish Republic of Northern Cyrus and recognized only by Ankara. The southern, Greek Cypriot government is internationally recognized.
Ankara says it won't allow Cyprus to drill until a reconciliation agreement has been reached. Since the Turks have been widely blamed for the failure to find such a pact over the last three decades, there are few expectations one is now within reach.
Meantime, the Turkish navy is on the prowl and Turkish F-16s have deployed at a TRNC airbase. The Israelis had "air exercises" in Cypriot airspace last week, a move Ankara deemed provocative.