Israel's Ministry of Energy and Infrastructure has announced the results of two of four tenders for a series of licenses for offshore blocks.
The tenders for the I region were won by a consortium of Delek Group Ltd. (TASE:DLEKG) (controlled by Yitzhak Tshuva) unit NewMed Energy (TASE: NWMD), BP (British Petroleum) and SOCAR (State Oil Company of Azerbaijan Republic). SOCAR will be the operator. The I region is west of Energean's (LSE: ENOG; TASE: ENOG) Karish oil field.
The tenders for the R region were won by a consortium of Ratio Oil Exploration Ltd. (TASE:RATI.L), Dana Petroleum (which works in the North Sea with Delek unit Ithaca) and Italian oil major Eni. Eni will be the operator. The R region is southwest of the Leviathan field.
In total the six companies won 12 exploration tenders, with four of the companies (BP, SOCAR, Eni and Dana) new to Israeli offshore exploration. The Ministry of Energy and Infrastructure said, "If natural gas is found in the new licenses, this will lead to diversification of supply and the strengthening of competition in the Israeli economy."
The state will receive $15 million as a signing on grant.
The interesting question remains who will win the tenders for the two other blocks. Bidders for these blocks include Energean and Aharon Frankel, the biggest shareholder in Tamar Petroleum (TASE: TMRP), which submitted bids as part of separate consortia. Sources inform "Globes" that no date has yet been set for discussions on the two other blocks.
Hope pinned on these two tenders
The Ministry of Energy and Infrastructure is pinning major hope on these tenders as part of its plans to attract new international companies to embark on Israeli operations. The entry of Eni, SOCAR and BP is indeed a promising development in terms of the domestic market and it should be taken into account that BP and ADNOC (Abu Dhabi National Oil Co.) from the UAE are in the process of buying a 50% stake in NewMed Energy. At the start of the month NewMed Energy had asked BP and ADNOC to increase their bid for it but since the start of the Israel-Hamas war, NewMed's share price has fallen 22% and there are concerns that the deal could fall through.
The companies that won the tenders will be granted a license for three years toi conduct exploration drilling. The companies will be able to request an extension of two years while submitting a work plan for drilling in at least one of the licenses. After performing at least one drilling and complying with all the work plans, it will be possible to extend the license period in the cluster by another two years, up to a maximum of seven license years.
Minister of Energy and Infrastructure Israel Katz said, "Dramatic news for the Israeli economy. Precisely at this time, giant natural gas exploration companies are expressing confidence in Israel's resilience and want to invest here. The winning companies have committed to unprecedented investments in natural gas exploration already over the next three years, in pursuit of discovering new reserves, thus strengthening Israel's energy security, strengthening Israel's international ties, lowering the cost of living and providing energy support to accelerate the transition of the economy to renewable energy," Globes reports.
