Major New Gas Find Off Israel’s Mediterranean Coast

Royee field could be Israel’s third largest and create competition for Noble-Delek monopoly.

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

A new natural gas field off Israel’s Mediterranean coast may hold about 3.2 trillion cubic feet of gas, about one third the size of the giant Tamar field, its two Israeli partners said Sunday after conducting a 3D seismic survey of the area.

If the estimate is accurate, reserves for the Royee prospect, located about 150 kilometers (93 miles) offshore Israel and close to its maritime borders with Cyprus and Egypt, would be the third-largest discovered in Israeli waters and the fourth-largest in the Mediterranean Basin, said Israel Opportunity, a partner in the group.

“At the national level, the news means a lot. We have learned that the Levantine basin holds reservoirs at other depths and I hope the next government will exploit the opportunity by encouraging entrepreneurs to continue the exploring and developing,” said Eyal Shuker, CEO of Israel Opportunity, which holds a 10% stake of the Royee project.

“Our strategy of diversification of assets and risks has proven itself,” said Shuker, whose company suffered a dry well at the Yishai license a year ago.

Nevertheless, shares of Israeli Opportunity closed up just 3.4% in Tel Aviv Stock Exchange, trading at 9 agorot (2 cents). Ratio, which has 70% of Royee, rose 1.1% to 39 agrorot. The market’s reaction was restrained due to the sharp drop in world petroleum prices, which also lowers the value of natural gas reserves.

The remaining 20% of the project is controlled by Edison, the Italian power company controlled by France’s EDF.

The discoveries in 2009 and 2010 of the huge Tamar and Leviathan fields nearby, which hold combined reserves of about 11 and 22 TCF, respectively, triggered an exploration boom in the eastern Mediterranean.

The company provided a range for estimated reserves of 1.9 TCF to 5 TCF, with a best estimate of 3.2 TCF. The drilling of an exploration well is expected to begin a year from now at a cost of about $100 million, said Israel Opportunity’s CEO Eyal Shuker.

The drilling will be done from a platform leased from the Leviathan field partners and led by Edison, which has experienced in deep sea drilling as well as liquefied natural gas projects.

Royee and another field called Neta alongside it are named after two of geologist Eitan Eisenberg’s grandchildren and once constituted the Gal license. Ratio once controlled the entire field but subsequently sold stakes to Israel Opportunity and more recently to Edison.

Edison is seeking other opportunities in Israeli gas, bidding to buy the Karish and Tanin fields, with combined estimated reserves of 3 TCF, from the Delek Group and Noble Energy, which are the lead partners in Leviathan and Tamar.

The Royee field is the first major one in which Delek and Noble have no stake. If the Italian company’s succeeds in acquiring Karish and Tanin, its 6 TCF in gas holdings in Israel would be enough to serve as competition for the Noble-Delek monopoly.