The Tamar gas field, 50 miles off the Haifa coast, keeps getting bigger with every report, and the gas discovery now is estimated to be the world’s largest in 18 months. The Scotland-based Wood Mackenzie research and consulting firm assessed the value of the field at $8 billion, approximately double that of local analysts. The latest upside projection comes less than two weeks after another revised estimate that the reserves are 16 percent higher than previously thought. Changing gas prices could make the gas worth anywhere between $3.5-$17 billion in the future, and partners in the offshore project are preparing for the first deliveries of gas in 2012. They have approved expenditures of $230 million for equipment and services to be provided by Noble Energy, a partner in the project, along with Israeli firms Delek Drilling, Avner Oil and Gas and Isramco. The future impact of the gas field on the Israeli economy is enormous. "Few doubt that the country, which for decades has been dependent on importing nearly all of its energy needs, has entered a new era of far greater economic independence,” Business Week commented in its current issue. Delek official Yitzchak Tshuva jubilantly announced after the discovery that Israel is on the road to energy independence. Tshuva and other project participants stated, "We have already sufficient Israeli natural gas to meet all of the country's needs for many years, and we intend to continue searching in our many franchises off the Israeli coast.” The area of the gas discovery has largely been unexplored, leaving open the possibility of more finds, perhaps even of oil. Delek Drilling's Tzvi Greenfeld said, "If we find more gas, then there is a greater chance Israel will become an exporter." The multi-billion infrastructure work for new sea-to-land gas lines and for a 500-kilometer long (311 mile) distribution network will create hundreds of jobs for engineers and workers. The move to gas from oil and coal will help diversify the economy, Ohad Marani, board chairman of the state-owned gas distribution network told Business Week. The Finance Ministry will enjoy approximately $5 billion in royalties when gas starts flowing, estimates Gal Reiter, energy industry analyst at Clal Investments. Furthermore, Israel will drastically cut back the $5 billion it pays for fuel imports, leading to stronger balance of payments. An era in which Israel will be more self-sufficient in energy needs also will help make the shekel more attractive. Cheaper foreign currencies will help lower the price of imports for consumers but could cause further problems for the exporters, whose profits are dented after income in dollars and euros is exchanged for shekels. ====== Sandler is a correspondent for BusinessWeek in Jerusalem.
Israel ‘Super Gas’ Field is World’s Largest in 18 Months
Israel Moves Toward Energy Independence
The huge natural gas reserves off the country's Mediterranean coast are 16% bigger than estimated just one month ago
Wider Searches
Balance of Payments Boost
Egypt to Raise Gas Prices to Israel by 50%
Israel buys gas from Egypt
Thursday, 27 August 2009
MAY ISRAEL AVOID PREEMPTIVE SURRENDER IN 2009
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Elul 6, 5769, 26 August 09 06:08
by Tzvi Ben Gedalyahu(Israelnationalnews.com)
As CEO of Delek Drilling, an Israeli oil and gas exploration company, Zvi Greenfeld is a self-proclaimed optimist in an extremely risky business. But even Greenfeld was taken aback by the news on Aug. 11 that the huge natural gas reserves off the country's central and northern Mediterranean coast discovered by Delek and its partners in January are 16% bigger than estimated just one month ago. Independent energy experts reckon this once energy-poor country now has enough natural gas to meet its needs for the next two decades and may ultimately even transform itself into an energy exporter.
The discovery has raised hopes of further gas finds in a region that to date has been largely unexplored. Delek Drilling and its partners, Houston's Noble Energy (NBL), Avner Oil Exploration, Isramco (ISRL), and Dor Gas hold 16 additional expanses that cover 9,000 square kilometers, more than 20 times the size of the Tamar tract, which initial estimates value at $15 billion. In the near future, extensive seismic tests will be conducted to decide on additional drillings during 2010.
"The Tamar and Dalit discoveries significantly increase the probability of finding gas and/or oil in adjacent areas in the eastern Mediterranean," says Delek Drilling's Greenfeld. "If we find more gas, then there is a greater chance Israel will become an exporter."
The Israeli find has whetted the appetite of international companies for exploring off the nearby waters of Cyprus, Lebanon, and Syria. In May the Greek Cypriot government gave Noble Energy the green light to start searching for oil and gas off the island's southern coast by the end of the year.
With gas not expected to begin flowing until 2012, it is investors who are the big winners from the discovery to date. Shares in three of the Israeli partners involved in the drilling—Delek Drilling, Avner Exploration, and Isramco—have skyrocketed by 300% to 1,000% on the Tel Aviv Stock Exchange since the beginning of the year, making them the top performers on the local market.
Energy experts believe that the discovery of gas also will have a dramatic impact on the Israeli economy in the decades to come. "This will lead to an even greater diversification of our economy which has depended on the high-tech and defense industries for much of its recent growth," says Ohad Marani, board chairman of Israel Natural Gas Lines, the state-owned gas distribution network and a former director general of the Finance Ministry. The technology sector already accounts for more than 50% of all industrial exports and was a major contributor to the five years of rapid growth the Israeli economy experienced through 2008.
Few expect natural gas to become a major Israeli export item in the foreseeable future as it would take years to develop any new discovery. Moreover, the gas from the Tamar and Dalit finds are expected to be sold locally to meet rapidly growing demand. Israel's National Infrastructure Ministry predicts that demand will triple from 4 billion cubic meters annually this year to 12 billion cubic meters in 2016 as power plants and industry rapidly switch from oil to gas, a far more environmentally friendly fuel. At present, the only sources of supply come from a small field off Israel's southern Mediterranean coast that is expected to be depleted within a few years and from Egypt.
Initially, the local economy will benefit from billions of dollars in investments in infrastructure for bringing the gas on shore as well as the construction of a $1 billion, 500-kilometer-long distribution network. And once the gas starts flowing in 2012, the state coffers are likely to swell. "The state treasury will make over $5 billion in royalties and corporate taxes from the production of gas at the Tamar field alone," estimates Gal Reiter, energy industry analyst at Clal Finance & Brokerage, a leading Tel Aviv investment bank.
Additionally, Israel's balance of payments is likely to show an even larger surplus in the coming years as the country reduces its dependence on imported oil and coal. In 2009, Israel will shell out $5 billion for fuel imports. That figure could drop significantly as a greater percentage of local energy needs is met by the offshore gas. "Five years from now gas will provide one-third of our energy as power plants and industry switch over," predicts Amit Mor, CEO of Eco-Energy, a Herzliya-based energy consulting firm. By comparison, gas accounts for 15% to 20% of energy supplies in the U.S. and most Western European countries. Israel's National Infrastructure Ministry is considering adapting the country's bus fleet and possibly cars to run on natural gas.
The local discoveries of natural gas, while significant, have yet to place Israel in the league of some of its neighbors such as Saudi Arabia. But few doubt that the country which for decades has been dependent on importing nearly all of its energy needs has entered a new era of far greater economic independence.
© Copyright IsraelNationalNews.com
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Elul 6, 5769, 26 August 09 05:53
by Hillel FendelIsraelsraelnationalnews.com) The Israel Electric Company directorate is expected to approve an upgrade of its business relationship with Egypt’s gas company – at the expense of Israel’s largest gas company, Delek Energy.
The Egyptian concern, known as EMG, comprises the Egyptian government, Arab businessmen, Yossi Meiman of Israel and Sam Zell of the United States. It signed a contract with the Electric Company (IEE) in 2005 to supply natural gas to Israel. In 2008, EMG became Israel’s largest gas supplier – and the agreement expected to be approved tomorrow will give it an even larger share.
Delek says that IEE is giving in to Egyptian blackmail and is involving political considerations in its decision.
In a sharp letter to the IEE directorate, which is to discuss and vote on the proposed deal with EMG on Thursday, Delek chairman Yitzchak Tshuva writes, “IEE is discriminating against natural gas in Israel in favor of the Egyptian supply, and giving into Egyptian suppliers’ blackmail, even though they have violated its agreements with you.”
It was reported earlier this month that Israel’s gas deposits at the Tamar-1 drilling site are 16 percent more than was estimated just a month before – which, in turn, were 30 percent higher than had been previously thought. It is now felt that some 207 billion cubic meters of gas are drillable at Tamar, located 80 kilometers west of Haifa. Gas is expected to start flowing into Israel from Tamar three years from now.
“Delek Energy, a partner in the Yam Thetis gas company, has supplied natural gas to IEE since 2004 without default,” Tshuva wrote, “while EMG has repeatedly violated its agreement with IEE.” IEE has often accused the Egyptian consortium of providing less gas, of lower quality, than it promised.
Delek asked that it be allowed to participate in the directorate’s meeting on Thursday in order to present its case and “information that the directorate must have before making its decision.”
The Electric Company has already released a response, rejecting all the Yam Thetis-Delek charges.
The EMG-IEE agreement of 2005 stipulated that EMG would provide 1.7 billion cubic meters of gas annually for 15 years, with an option to increase the supply by 25 percent. The price per cm was approximately $2.70, and the price under the new agreement is expected to rise to over $4.00.
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