Israel Chemicals Unit Seeking Permit to Drill for Oil Shale in Negev

Region has huge potential, but antitrust and environmental concerns are considered likely to make the application a tough sell

An employee watches as red potash is deposited onto storage mounds inside a warehouse at ICL Fertilizer's Dead Sea Works, part of Israel Chemicals Group, on the Dead Sea, Israel, May 6, 2013.
Bloomberg

A unit of Israel Chemicals that makes and market fertilizers, seeks to exploit the vast oil shale reserves of Israel’s Negev and perhaps one day turn itself into a petroleum company.

Rotem Amfert has operated a small power plant at Mishor Rotem for decades, mining the oil shale that fuels it from the adjacent area. The company recently applied to the National Infrastructure, Energy and Water Ministry for right of first refusal to explore for oil shale in a 3,000-dunam (750 acres) area adjacent to the site in the northern Negev.

The decision to move from what ICL has called a small, experimental operation into a potential commercial venture comes as oil shale technology has made huge strides in recent years that make mining and processing it more economically feasible.

Although Israel has no conventional petroleum reserves, oil-shale deposits lie under as much as 15% of the country, an amount equal to tens of billions of barrels. Only a small part of these are commercially recoverable, but the Geological Survey of Israel believes that the biggest economic potential is in the northern Negev, in particular the Rotem-Yamin formation.

ICL will likely encounter obstacles to its plans. For one, it faces scrutiny from the interministerial committee on business concentration, which under a 2013 law must consider business concentration factors when awarding natural-resource exploration rights. The committee has been examining the application for several weeks.

Other companies, including New Jersey-based Genie Energy and Israel’s Shapir Engineering & Industry, have encountered stiff opposition from environmentalists when they sought to drill for oil shale on the Golan Heights and in the Ela Valley, near Jerusalem, .

Rotem Amfert’s application to explore in such a large area — its current license, which was reassigned to it in 2001 from the state-owned oil company Pama is for just 664 dunams — signals that it has commercial ambitions if sufficient recovery reserves are found.

The Israel Corporation, ICL’s parent company, which is controlled by billionaire Idan Ofer, is a major petroleum importer and refiner, through its control of Oil Refineries Limited. ICL holds the license to mine minerals from the Dead Sea and has ancillary operations in power generation and desalination.

Rotem Amfert confirmed it had submitted the exploration applications but said it had received no response.

Sources said the interministerial committee was likely to recommend to the Energy Ministry to reject the applications because of the concentration issues. But there’s no unanimity among officials, some of whom point out that it is in the national interest to develop Israel’s oil shale reserves and that the area Rotem Amfert is seeking to drill on covers only one-fourth of the entire license.