Energean, Indian Firms Win Israeli Licences

Israel Petroleum Council has granted six licences for oil and gas exploration offshore Israel after a year-long licensing round, which ended with disappointing results. No major oil company bid, and of the 24 blocks on auction only six were granted: five to Greek producer Energean which is already present with eight other licences; and one to a consortium of Indian energy companies comprised of operator ONGC and IOL, IOCL and BPRL.

Energean said the licences are highly prospective and would benefit, in the event of any economic hydrocarbon discoveries, from being developed via tie-backs to the floating storage, production and offtake vessel that Energean will construct for the development of the Karish and Tanin fields.

The two groups will have 30 days to complete various official requirement of the energy ministry, with work plans expected to be finalised and submitted to the ministry by the end of 2018.

Energy minister Yuval Steinitz spearheaded roadshows in the US, London and Singapore, which were aimed at majors and mid-market producers. However, despite the success of licensing rounds in Cyprus and the willingness of energy companies to take part in a Lebanese licensing round, and the development of Egypt offshore natural gas reserves, no international player in the energy sector submitted a bid, a sign of the risks of working in Israel, where on top of the usual geopolitics is the government infighting over Leviathan, a field discovered early this decade and still not developed. 

"This is the beginning of a long-term process that will lead to the realisation of the potential of natural gas and oil reserves in the economic waters of the State of Israel for the benefit of the citizens of the country," said Steinitz. "I welcome the entry of companies from India and Greece into the Israeli energy market. I believe that the memorandum of understanding signed last week for the construction of a natural gas pipeline from Israel to Italy will make gas exploration in Israel more attractive.

"Therefore, I have instructed to begin preparing for another competitive process in 2018, in which the lessons learned will be assimilated."

Indian interests

According to an Israeli analyst, the participation of the Indian consortium in the licensing round was initiated by the growing needs of India for energy supply in the coming decades. However, the fact that the consortium was granted only one block shows the limitation of this participation. It is more plausible that the warming political relation between Israel and India in the last few years, and the personal relations between the two prime ministers, Narendra Modi and Benjamin Netanyahu, has more to do with the Indian interest in Israeli gas than any other consideration. The two nationalistic leaders met in Israel last July and Netanyahu is expected for a reciprocal visit in India in January 2018.