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Hoping that better market conditions and better bidding terms will spark more interest than his latest disappointing efforts, Israel is considering a second energy exploration licenses auction at over the next few weeks, announced Sunday the Ministry of Energy.
The government will offer oil and gas companies 19 offshore blocks in its economic waters off the Mediterranean coast, where seven discoveries of natural gas have been discovered since 2004.
"The goal is to build on the momentum of Israel's gas sector development, strengthen competition by engaging new international energy companies and increase the energy security of the State of Israel," said the Minister. of Energy, Yuval Steinitz.
He spoke about the development projects of a submarine gas pipeline connecting Israel to Cyprus, via Greece and Italy. If the pipeline is actually built, it would allow Israel to export energy to Europe and make the auction blocks more attractive to bidders who see little potential in the tiny market. Israeli.
Last year's bidding resulted in only two bids – one from the Greek company Energean and another from an Indian consortium including ONGC Videsh, Bharat PetroResources, Indian Oil Corporation and Oil India. This last group has not yet completed its license.
Udi Adiri, director general of the Ministry of Energy, expressed his reserved enthusiasm for the interest aroused by the new call for tenders.
With global energy market conditions improving, companies are more willing to invest, he said, noting that even before the publication of the call for tenders Delegations of leading global energy companies had visited Israel and expressed interest.
Among other things that have changed since the launch of the last auction in 2016, noted Adiri, gas prices in Europe have increased. At the same time, preliminary results from the Noor deposit in Egypt indicate vast new reserves that, according to an Egyptian official, could reach about 90 trillion cubic feet, which is three times the size of the giant Zohr deposit in Egypt. Zohr and Noor are part of the same geological region.
Many experts have estimated that the discovery of significant new reserves in Egypt and the agreements reached in recent months that will allow Israeli companies to export gas to Egypt would open the way to an energy hub in the Mediterranean. eastern hemisphere including Egypt, Israel and Cyprus.
"We are seeing a very high level of interest compared to the previous period," said Adiri, highlighting the stable Israeli regulatory regime, low taxes and export restrictions.
"In 2016, there was no export agreement, and today we have an export agreement with Jordan, an export agreement signed and approval procedures for Egypt, serious talks on a gas pipeline to Europe and gas demand in Israel will double in 12 years, "he added.
In addition, said Adiri, the auction is structured to make it more attractive to investors. Unlike the previous round, bidders will be offered blocks in groups centered on a block considered to have a relatively high potential for discovery, and the government is proposing more comprehensive geological studies, he said.
The details of the terms will be published in late November and the winning companies will be selected within six months. But, in general terms, licenses are auctioned in 19 blocks of 400 square kilometers each. They have been divided into four sectors with a maximum area of 1,600 square kilometers.
Adiri acknowledged that some of the blocks had already been explored, but added that this did not mean that they were dry because previous drilling may have reached the wrong layer.
The exploration licenses will be valid for three years and may be extended for four years if the minimum conditions are met. Bidders must have at least $ 400 million in equity and at least 25% of the group must be owned by an operating company, the ministry said.
The winners will have to deposit $ 2.5 million against the first block won and $ 500,000 on additional blocks. Another $ 5 million deposit will be needed before drilling begins, the ministry added.
The Israeli group Delek and Texas-based company Noble Energy, who develop and hold the Tamar and Leviathan fields off Israel, are barred from auctioning because of their hold on the domestic market. The auction rules prohibit companies holding 20% or more of energy rights Israel from participating.
The winners will be chosen according to the quality of their offers. Points will be awarded for factors such as the bidder's price and quality, based on industry experience and environmental factors. The auction will give preference to companies that do not already operate in Israel.
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