Israel Set to Auction Offshore Gas Blocks

The Levant Basin (graphic courtesy U.S. EIA)

By Reuters 2016-08-10 20:44:34

Israel is preparing to tender 24 offshore exploration blocks as it looks to bolster its oil and gas industry after a four-year lull sparked by regulatory uncertainty and stock-price volatility.

Their proximity to a number of large and proven gas deposits in the eastern Mediterranean should make the tenders attractive.

Nearly 2,200 billion cubic meters (bcm) of natural gas is waiting to be found in Israeli waters, more than double the amount already discovered, Energy Minister Yuval Steinitz told Reuters on Wednesday, basing the estimate on a third-party geological study.

The study also points to a potential 6.6 billion barrels of oil.

"Things are now moving forward at an amazing pace," Steinitz said, adding that while the government has yet to determine the type of tender, the blocks should available by November.

Israel entered the world of hydrocarbon exploration seven years ago when some of the largest offshore gas fields of the decade were found off its coast. But things got off to a rough start.

Energy stocks jumped and plummeted on minor company announcements and the government, caught off guard by the windfall, began altering tax and export policies to secure a bigger share of the pot.

This put off investors and in 2012 Israel officially halted any new exploration.

But regulators have since put forth new guidelines, the stock market has steadied and the government this year finalised its policies, paving the way for renewed activity.

"We've completely solved the problems," Steinitz said.

The blocks are up to 400 square kilometers in size in waters up to 1,800 meters deep. Some are adjacent to the recently discovered Leviathan and Tamar fields.