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There could be a reservoir of 980 million barrels of oil at the Meged-4 well northeast of Kfar Sava, exploration company Givot Olam said yesterday, reporting geological findings to the Tel Aviv Stock Exchange.

In September, the company said it had found traces of oil at the site, but assessed the size of the oil field at only 50 cubic meters. In February, the company said the oil reservoir was four times bigger with a potential for yielding some $6 billion worth of oil at today's prices.

Givot Olam said the analysis indicated reservoirs of oil in rocks dating to the Lower Cretaceous Period (50 million years ago), and the oil-bearing layer could be 20 meters thick. But the company said just 20 percent of the reserve is extractable.

It emphasized that the assessment of the reservoir's size and extractability could change significantly as development progresses. Tovia Luskin, director of Givot Olam, said the company would need to raise $20-50 million to develop the find, which he hopes will begin within a year.

Due to the rock formation at the site, horizontal rather than vertical drilling would be required. Horizontal drilling has succeeded in extracting oil at depths of up to 2 kilometers but the technology has not been proved at greater depths. The Meged-4 find is 4.5 kilometers deep.

About three years ago, Givot Olam announced that drilling in the Meged-2 well to 5,200 meters in the Rosh Ha'ayin region near Tel Aviv had indicated oil deposits with gas. However, the rock formation at the site, southeast of Meged-4 in the Rosh Ha'ayin area, did not allow for production. A later exploration at Meged-3 failed to find any oil deposits.

Israel currently produces a minuscule 1,000 barrels of oil a day. (With 250 billion barrels in proven reserves, and an ability to pump up to 10 million barrels a day, Saudi Arabia has the world's biggest oil resources).

In the past two decades, Israeli oil companies from time to time have claimed commercially exploitable finds but none have panned out. Givot Olam shares surged 55 percent on the Tel Aviv Stock Exchange on news of the claim.