Deepwater Well Karish Holds 13 Million Barrels of Crude

To exploit the condensate, which is used to produce Brent crude, Israel has to convert its refining facilities.

The Karish offshore oil prospect contains 13 million barrels of condensate, says a report released Sunday by license partners Delek Drilling and Avner Oil Exploration, both of which are controlled by Delek Group.

The report is based on an analysis by U.S. firm Netherland, Sewell & Associates.

The value of the condensate, which is used to produce Brent crude, is estimated at NIS 3.5 billion to NIS 4.0 billion. Condensate is a byproduct derived from the extraction of natural gas and does not involve any additional cost to produce.

Still, use of the condensate requires the conversion of refining facilities in Israel. The Karish well might not be developed for several years, so production could be a long way off.

The condensate at Karish is equivalent to the volume at the nearby Tamar field, which is five times as large. The Tamar, Karish, and Leviathan gas fields are estimated to hold about 60 million barrels of condensate.

Paz Oil is already buying condensate from Tamar in a deal worth around $250 million.

Israel's oil consumption amounts to between 100 million and 120 million barrels a year; drilling for oil at the enormous Leviathan field is slated for the end of 2013 and beginning of 2014.

Delek Drilling and Avner each hold a 26.5% stake in Karish, with 47% held by Noble Energy. Shares in Delek Drilling and Avner were both up more than 1.5% in mid-afternoon trade Sunday, while Delek Group was up 2.6%.

Besides condensate, Karish has only 1.3 trillion cubic feet of confirmed natural gas in its main sector as well as 0.5 TCF in a smaller area that isn't yet known to be connected to the main sector. The smaller amount is therefore classified as prospective and without certainty.

Preliminary estimates for Karish spoke of 3.2 TCF of natural gas, but drilling indicated much lower reserves. Noble Energy, the project's operational partner, gave an overall estimate of 1.8 TCF several months ago. Karish, 100 kilometers west of Nahariya and north of the Leviathan reserve, is Israel's fifth offshore field.

Ofer Vaknin
Bloomberg