Exploration off Israel's Mediterranean coast is set to resume in the coming months after a hiatus of several years with a new foreign player, Energean Oil and Gas, expected to enter the market following its acquisition this week of the Karish and Tanin gas reservoirs from Israel's Delek Group.
The Cypriot company will pay $148.5 million and 9% of future revenue from the sale of gas from the two adjacent reservoirs.
Israeli energy industry sources said that Energean is expected to present the Energy and Water Ministry with a detailed plan for developing Karish and Tanin early next year.
The sale of the licenses coincides with plans by the Tamar consortium (Noble Energy, Delek Group, Isramco and Dor Gas Exploration) to drill a sixth well at the Tamar field at a cost of $265 million. Tamar is currently the sole source of supply to the domestic market.
The partners said that the new drilling would take place 100 km west of Haifa and be conducted by the Atwood Advantage ultra-deepwater drillship.
Israeli energy industry sources said that another Israeli exploration company, Ratio Oil Exploration, has been holding discussions with Atwood about leasing the vessel for drilling in its Roi offshore license, which it holds together with Italy's Edison and the Israel Opportunity Fund.
"We are witnessing a resurgence of exploration activity due to the removal of regulatory uncertainty and risk following the approval of the new gas sector framework by the government," said Chen Herzog, chief economist and energy expert at BDO Consulting in Tel Aviv.
He added that drilling on the Leviathan field, the largest discovered so far offshore Israel, is also likely to commence within the coming year. Much of the gas from Leviathan is to be exported.
The new framework required Delek Group to sell its stake in Karish and Tanin within 14 months as part of the government's effort to spur competition in the sector, which is dominated by Delek and Noble Energy. The two reservoirs have an estimated 60 to 80 Billion cubic meters in resources, which are earmarked for the domestic market.
Meanwhile, exploration will get a further boost from the decision in early August by Israel's Petroleum Council to approve the granting of 24 new licenses in the country's economic waters.
The Council recommended that the ministry offer 24 blocks of approximately 400 square kilometers each, in an open international bidding process. Some of the blocks are located close to areas where gas has already been discovered, specifically the Leviathan and Tamar fields, in water depths of 1.5 to 1.8 kilometers and all are located at least 7 km from the coast. The bidding process is expected this autumn.
The ministry said it is hoping for keen interest on the basis of a recent survey it commissioned which estimated potential undiscovered offshore resources at 6.6 billion barrels of oil and 2.137 trillion cubic meters of gas. Just over 1 Tcm of gas has been discovered so far offshore Israel.
