Gazprom Wants Into Israeli Gas Scene

Representatives of Russian energy giant Gazprom have met with Ya'akov Mimran, the National Infrastructure Ministry's petroleum commissioner, to discuss the possibility of Gazprom being part of the group operating the Sarah and Mira offshore natural gas fields.

The petroleum commissioner is responsible for awarding oil and gas exploration and drilling licenses, on land and at sea. To receive a license, the oil and gas exploration firms need a professional partner, known as the "operator," with experience in drilling such wells. Usually, the operator is also a partner in the venture.

For example, the Israeli partners in the Tamar offshore gas field are Delek Drilling, Avner, Dor Alon and Isramco; and they brought in U.S. firm Noble Energy as their operator. In general, the partners invest the funds for production based on their relative share in the partnership, and then split the proceeds based on the same relative share.

Gazprom is Russia's largest company and the world's largest extractor of natural gas. It was partially privatized at one point, but now the Russian government owns it. It has a monopoly in the Russian gas market and supplies 25% of Europe's natural gas.

Mira and Sarah are located 40 kilometers off the coast near Hadera, adjacent to the Tamar and Dalit fields, which have already show.

Ofer Nimrodi and Yitzhak Sultan signed an agreement to buy the Canadian company PetroMed Corporation, which holds licenses to explore the Sarah and Mira areas for fossil fuels. Nimrodi and Sultan paid $16 million. The rights to the Mira and Sarah licenses belong to PetroMed (95%). A difference of opinion with the 5% stakeholder, a foreign company owned by geologist David Peace, had earlier stymied negotiations for the purchase.

The chairman of Gazprom is Viktor Alekseyevich Zubkov, who is also Russian prime minister Vladimir Putin's First Deputy Prime Minister.

An energy industry source said Gazprom's interest in the Israeli market is not at all surprising. It had considered becoming a local operator in the past in other fields. Another possibility is for Gazprom to provide Israel with natural gas through a pipeline via Turkey. Former National Infrastructure Minister Benjamin Ben-Eliezer met with Gazprom CEO Alexei Miller in Moscow two years ago on such matters.

A number of other Russian energy giants are showing interest in the Israeli energy and infrastructure sector.