Friday 17 November 2017

The 1st Israeli offshore licensing round closed:

Companies from India and Greece Bidded on Gas and Oil Exploration Blocks Offshore Israel

The 2nd licensing round will be launched in 2018

Today marked the end of the first ever competitive process in Israel for awarding oil and gas exploration licenses in its exclusive economic zone. The Ministry of Energy received bids from several international companies: Energean from Greece and a consortium of Indian companies that includes ONGC Videsh Limited, Bharat PetroResources Limited, Indian Oil Corporation Limited and Oil India Limited.

The Minister of Energy, Dr. Yuval Steinitz: "this bid round is the first step in a long-range process that would lead to utilization of the gas and oil fields in the Israeli EEZ to the benefit of Israel's citizens. Also, in 2018 we will launch another licensing round incorporating conclusions that will be drawn from the current round, and thus continue the effort to develop these strategic assets in the Israel's exclusive economic zone."

Ministry of Energy officials point out that this is a first round of its kind, after more than 4 years during which the sea was completely closed for the distribution of new exploration licenses. The current licensing round included marketing conferences and worldwide road shows in order to encourage international companies to join in. This 1st bid round included 24 licensing blocks each of a maximum size of 400 km2.

In the course of the coming weeks the relevant officials at the Ministry of Energy will examine the qualification of the bidding companies for the professional and financial preliminary requierments, and the proposed work programs will be reviewed to determine the winners for the licensing blocks and submit their bids for approval at the Petroleum Council.

As mentioned before, the companies were requested to prove financial capability of minimum USD 400M total assets and USD 100M in equity, and the operator is required to present proof of at least half those amounts. Also, the operator is required to prove professional capabilities in oil and gas offshore exploration and production, all in order to ensure that the winning companies would utilize the licenses awarded to them.

According to the licensing round principles, a license is given for a period of three years, at the end of which, the license can be extended by three additional years as long as the license holders have implemented the work plan and commit to carry out drilling during the extension period. In order to ensure the implementation of the work program, the license holders made a deposit of USD 2.5M to USD 10M, according to the work plan.

The competitive process for awarding gas and oil exploration licenses is another crucial part of the Ministry's intensive activity alongside the development of the Leviathan field, as well as Karish and Tanin fields, which changed owners and its development plan was approved, all in accordance with the gas outline.