The Israeli government has finally agreed to a deal with offshore gas exploration companies that looks to restart offshore development in the Middle East nation for the first time in 2015.
The move comes after all offshore exploration and development within the nations Mediterranean waters was halted back in December after Israel’s Antitrust Authority said that current offshore gas operations constituted a monopoly.
In particular, the Antitrust Authority pointed towards the offshore operations of U.S firm Noble Energy and Israel based Delek. The two companies are partners in the large offshore Tamar gas field, that came on stream back in April 2013.
Both Noble and Delek, were due to jointly develop the Leviathan offshore gas field before the Israeli regulators stepped in. The move halted any further development, including all negotiations on gas production sales.
In order to stop the wheels completely grinding to a halt, Israel’s government used a legal clause that gives power to override the nations regulator, stopping them from effectively turing the taps off from the offshore gas fields, linking gas production to ‘national security’
On the issue, a government source said “it is to the benefit of Israel’s economy to make sure the gas flows.”
Israel’s government has been directly negotiating the new deal, with the development of the Leviathan field due to be worth over US$1.5 billion over the next two years alone, Israel is aiming to show the nation is once again open for international investment.
As part of the new deal, both Noble Energy and Delek have agreed to reduce their stakes in the Tamar field, in order to keep their current interests in the larger Leviathan field intact.
Delek has agreed to sell its entire Tamar stake over the next six years, whilst Noble has agreed to reduce theirs from 36% down to 25%. The move will remove Noble from being the majority stake holder in the project.
The deal still has to be approved by Israel’s parliament, in a vote that looks to prove highly contentious, later this month. If the deal gets approval, it could make Israel one of the Middle East’s biggest gas exporters.
Speaking Sunday (16th August), Israel’s Prime Minister Benjamin Netanyahu said, “The true interests of the state of Israel require the approval of this outline as quickly as possible,”
On criticism he has received on reaching the deal, Netanyahu said he was “not impressed by populism”.
Israel’s Offshore Gas
The Tamar Field is located 50 miles (80km) off the coast of Haifa, at a water depth of 5,600 feet (1,700 meters). Production is pumped to a processing platform offshore via subsea pipeline. Production sits at around 985 million cubic feet of natural gas per day, with proven reserves of 223 billon cubic feet of natural gas.
The Leviathan field is located 81 miles (130k) off the coast of Haifa, and around 29 miles (47 km) south west of the Tamar field, at a water depth of 4,900 feet (1,500 metres). It has estimated reserves of around 621 billion cubic feet of natural gas.