IO Monthly Update - June 2018
Israel Opportunity's Latest Announcements
  • Petroleum Commissioner to Approve Extension and Update to the Work Plan of "Royee" License

On 1 July 2018, the Petroleum Commissioner at the Ministry of Energy (the "Commissioner") informed Israel Opportunity – Energy Resources, LP (the "Partnership") and the other partners to the license, that the Royee License will be extended until September 14 2018, under an updated work plan, following an application by the partners. The work plan includes signing an agreement with a drilling contractor and transferring it to the Commissioner by September 1 2018, and spud date by January 15, 2019. The Commissioner added in his announcement that the Ministry of Energy intends to launch a second-round competitive bid and in the event that the partners would not follow the updated work plan, the license would be returned to the state and may be included in the upcoming bid.
The Partnership's work interest in the license is 10%.
Industry Updates
  • Navitas Petroleum Aims at Reviving Israeli Oil Field "Meged" as Operator
According to Globes report of 18 June 2018, the Commissioner has annulled the Meged lease, which was held by "Gva'ot Olam" partnership, due to its failure in further developing the field. Gva'ot Olam can still appeal this decision to the Energy Minister, while the partnership's general partner is working to prove an ability to develop Meged oil field: a memorandum of understanding was signed with Navits Petroleum regarding collaboration on the field. Bizportal reported on 18 June 2018 that chairman of Navitas, Gideon Tadmor, considers the field a valuable oil asset, that was merely managed ineffectively. CFO of Shafir Engeneering, Gva'ot Olam's general partner controlling shareholder, added that the field's production potential is estimated in thousands of oil barrels per day.
  • Energean Notifies Intention to Begin Exploration Drilling in "Karish" North
According to Globes report of 25 June 2018, Energean has informed the London Stock Exchange of its intention to begin exploratory drillings in the area of its Karish lease in Israeli economic waters, north of the Karish field, in search of more hydrocarbons. The drilling is scheduled for late March 2019 at an estimated gross cost of $15-25 million. The company says that the purpose of the exploratory drilling in Karish is to "take full advantage of all the existing resources" in the lease. NSAI report estimates the Karish North prospect gross recoverable unrisked prospective resources at 33.5 BCM and 14 million barrels of light oil.
Regional Events
  • Reports in Egypt: Giant Gas Field has been Discovered by ENI
Calcalist reported on 27 June 2018 that during an interview to a local network, Egyptian Energy Minister had suggested that a giant gas field ("Noor") has been discovered offshore Egypt by Italian ENI, sized 90 TCF, and that an announcement regarding this would be made shortly. Despite absence of support to the Minister's expression by ENI or other reports, Israeli gas sector reacted with sharp declines. Nonetheless, according to the interpretation of analyst Yehonathan Shochat of Leader Capital Markets, such discovery promotes Egypt's ambitions to become a regional energy hub and gas exporter, and therefore would actually form an interest to purchase gas from other regional fields. Shochat added that the expression seems very premature, however even if the purported discovery would in fact be verified, such field is still years away from full development, so that existing agreements for the import of Israeli gas are not substantially threatened.
  • Delek Drilling and Noble Energy Close to Egypt-Israel Pipline Deal
Delek and Noble, the owners of the Leviathan gas field offshore Israel, are preparing the ground for natural gas exports to Egypt, Globes reported 11 June 2018. The purchase of rights of EMG's pipeline are estimated at $200 million, and according to Bloomberg, together with an Egyptian company this would provide the group with largest voting bloc in EMG. According to Bloomberg, the buyout would clear a major obstacle to the use of EMG’s pipeline to transport 64 billion cubic meters of natural gas from Israel’s Tamar and Leviathan fields to Egypt’s Dolphinus Holdings Ltd. over 10 years. EMG (East Mediterranean Gas Company) pipeline was used to export Egyptian gas to Israel from 2009 until its complete shut down in 2012 following repeated attacks to its onshore Sinai section by militants.
Regulatory Developments
  • The Adiri Commission, Tasked with Periodical Evaluation of the Israeli Gas Sector, has Reportedly Submitted Its Interim Recommendations

Udi Adiri, Director of the Israeli Ministry of Energy, was commission by Energy Minister Yuval Steinitz, to lead the periodical examination of the "Zemach Conclusions," dealing with establishing guidelines for Israeli natural gas exportation and evaluating Israel's domestic energy needs. The government's resolution, which adopted these conclusions, ordered an examination of the regulations emanating from the Zemach Conclusions every five years. Calcalist reported on 19 June 2018 that in its interim recommendations, the Adiri Commission does not significantly change the quotas allowed for export, which are approximately 40% of today's proven Israeli gas resources, however it recommends providing exemptions (or delay) for recently discovered small and medium size gas fields from the obligation imposed under the original Zemach Conclusions to connect to the onshore Israeli national grid.

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