Israel Plans Upstream Auction
The Oil Council, an advisory body to the Israeli energy ministry, announced August 9 24 new blocks for energy exploration to be auctioned in a new licensing round expected by the end of this year. All the blocks are in Israel's exclusive economic zone (EEZ) and at a distance of at least 7 km from the shoreline. It is the first time in four years that the energy ministry has launched a new licensing round.
All the blocks are of the same size – 400 km² – and they were chosen on seismic and geological criteria.
In green the 24 blocks in the auction (Credit: Israel Energy Ministry)
Tenders are due to go out by November and ministry officials hope to lure some of the energy majors to bid for licences, although that seems to be more wishful thinking than reality. Earlier this year Yuval Steinitz, the energy minister, visited the US for a roadshow and met with quite a few senior executives from American energy companies, mainly medium sized E&P operators. Yesterday Steinitz said the council's recommendations are an essential step for the development of the Israeli gas sector and it would encourage international energy companies to invest in the Israeli gas sector.
Who will bid?
Israeli regulatory and governmental bodies have yet to decide on criteria for the companies who will allowed to take part in the tender. It is still not clear whether companies who are part of the natural gas monopoly, Delek Group's subsidiaries and Noble Energy, will be allowed to submit bids. It is also not clear if Isramco, a partner in Tamar and Ratio, a partner in Leviathan will be allowed to bid. It is expected that the antitrust authority will oppose their participation.
With the expected licensing round Israel joins the one in Cyprus which is ongoing. Last month the Cypriot energy ministry announced the bidders for the third licensing round, which attracted Eni of Italy, French Total, US ExxonMobil and Norway's Statoil. It is hard to imagine any of them bidding in the licensing round in Israel.
Israel's Delek Group is bidding in Cyprus as well, in partnership with the British energy company Cairn for block 8 where they compete against Eni. Eni and Total are competing for Block 6's license.
According to the Cyprus Mail Turkey warned energy companies from taking part in the bid for block 6 because it doesn’t recognise the block as part of Cyprus's EEZ, even though the block is southwest of the island.
Ya'acov Zalel