Israel Finds Structure That May Have Big Gas Reserves

Energy Ministry delegation in London in road show ahead of November license tender.

Off Haifa coast, oil rig at enormous Leviathan natural gas field.
Albatross

Israel’s Energy Ministry told multinational energy companies it invited to a London energy conference that it has preliminary studies pointing to significant new reserves of natural gas about 50 kilometers offshore Netanya.

The structure, named Jonah – the prophet swallowed by the whale, Leviathan, which is the name of Israel’s biggest gas field – shows similar geological characteristics to the giant Zohr gas field, discovered by the Italian energy company ENI in Egyptian waters a year ago.

Sources told TheMarker that the seismic findings were not new but they had not been released to the public.

A delegation from Israel’s Energy Ministry, led by Minster Yuval Steinitz, is making a pitch to multinational energy companies overseas this week ahead of a planned tender for new exploration licenses slated for the middle of November.

The tender, the first Israel has conducted in four-and-a-half years, comes after a long period of turmoil over energy regulation that ended with the approval of the Gas Framework agreement earlier this year.

The Jonah structure lies in the area of the Mira licenses, which had been held by two Israeli companies – Ofer Nimrodi’s ILDC Energy and Tzahi Solomon’s Modiin Energy – which conducted tests showing only a modest 40 billion cubic meters of gas at the site – making it about the size of the tiny Karish license.

The two companies began exploratory drilling four years ago but gave up for technical reasons before penetrating the structure. They then decided to try drilling at the adjacent Sara license, which came up dry and brought an end to exploratory activity in the area.

The data on Jonah was presented as part of a wider survey of energy potential in the Eastern Mediterranean basin, which is based on a study the Energy Ministry ordered a year ago that estimated the area had another 2,200 BCM of gas to be discovered.

Israeli industry sources have expressed skepticism about the potential reserves. In any case, the real challenge facing Steinitz and energy policy makers is the lack of interest by global energy companies in exploring in Israeli economic waters, and the general downturn in the industry amid low energy prices.

Nevertheless, RPS and HIS, the two firms retained by the Energy Ministry to advise it on policy, recommended going ahead with a road show that began in London and moves to Singapore today.

Among the most prominent attendees at the London meeting were the Italian companies Edison and ENI, which have expressed an interest in the Israeli market in the past. The delegation will fly in the next few weeks to Texas.