Two groups bid to explore for oil, gas in Israeli waters

Energy Minister says "we are continuing to act to transform Israel into a regional energy power."

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July 15, 2019 18:07
2 minute read.
Two groups bid to explore for oil, gas in Israeli waters

An aerial view shows the newly arrived foundation platform of Leviathan natural gas field, in the Mediterranean Sea, off the coast of Haifa. (photo credit: MARC ISRAEL SELLEM)

Two consortia have submitted bids for oil and gas exploration rights offshore of Israel, the Energy Ministry said on Monday.
 
A consortium made up of British companies SOCO International and Cairn Energy together with Ratio Oil Exploration, and another consortium of British firm Energean Oil & Gas in partnership with Israel Opportunity, submitted bids for 12 out of 19 offshore blocks available for exploration, the ministry said.
 
“Several years after the natural gas deal was passed, there are three international groups – based on European and American companies – that will seek to develop the gas and oil resources of the State of Israel,” said Energy Minister Yuval Steinitz.
 
“The proposals received will triple the number of licenses for gas and oil exploration in Israel’s economic waters [from six blocks to 18]. The arrival of additional European companies in Israel, alongside the imminent construction of the Leviathan platform and continued development of the Karish-Tanin reservoir, will lead to the dismantling of the monopoly in this field and increase competition.
 
“We are continuing to act to transform Israel into a regional energy power,” Steinitz said.
 
Under the second offshore energy tender process to date, the Energy Ministry offered licenses for the exploration of 19 blocks, each spanning up to 400 sq.km. each. The blocks were divided into five clusters, with each cluster not exceeding 1,600 sq.km.
 
Marketing the blocks in clusters was intended to match search areas to geological structures on the ground. The allocation of larger areas sought to enable companies to conduct geological and geophysical surveys in a more professional and efficient manner, in addition to increasing the attractiveness of the areas to investors.
 
Steinitz – together with ministry director-general Udi Adiri and other representatives – held numerous meetings with representatives of international energy companies, the ministry said.
 
Despite reports that American oil and gas giant ExxonMobil and Brazilian corporation Petrobras were considering bidding for exploration rights, neither company submitted bids.
 
Bidding companies were asked by the Energy Ministry to prove their financial ability to explore the offshore blocks, with basic guarantees for each license costing $2.5 million. Additional licenses for blocks within the same cluster cost a further $500,000 per block. Prior to drilling, license holders will be required to provide additional guarantees of $5m. per block.
 
Exploration licenses will be awarded for an initial three-year period, after which extensions may be granted on two occasions for a total of four years based on progress in exploration and drilling activities.
 
Seven natural gas fields have been discovered offshore of Israel to date, including major reservoirs found at Tamar and Leviathan that are estimated by the Energy Ministry to hold a combined 750 billion cu.m. of natural gas.
 
The first of four giant barges transporting the Leviathan natural gas platform to Israel departed the Gulf of Mexico last week ahead of its September installation off the Israeli coast.
 
Once assembled, project partner Noble Energy will commence a series of commissioning tests prior to initiating commercial gas flow before the end of 2019 to the Israeli market, and subsequently to neighboring countries.
 
In February 2018, Delek Drilling and Noble Energy signed a $15b. decade-long deal to supply 64 billion cu.m. of natural gas to Egypt from the Leviathan and Tamar gas fields, with the latter already supplying natural gas to Israel since 2013.
 
The deal with Egypt follows a September 2016 agreement worth $10b. between Jordan’s National Electric Power Company and the Leviathan project partners to supply a gross quantity of 45 billion cu.m. of natural gas to Israel’s eastern neighbors over a 15-year period.


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