Page 4 - MEOG Week 23

MEOG Commentary MEOG
Israel licensing
round deadline
extended
The Israeli Energy Ministry has extended its ongoing second licensing round, saying that prospective bidders needed more time.
Israel
What:
Israel’s Energy Ministry pushed back the deadline last week for its ongoing offshore licence tender.
Why:
Companies involved in the bid round were cited as having asked for more time.
What next:
Major players were reported to be circling, and stakeholders will be hoping that Israel’s second bid round is not going to turn out the same way as its rst.
IsrAEl’s Energy Ministry pushed back the deadline last week for its ongoing o shore licens- ing round, giving rise to concerns that optimism about the tender may have been premature.
e deadline has now been pushed back from June 17 to July 15 and the winning bids will be announced on August 12, according to a state- ment on the Energy Ministry website.
e Petroleum Commissioner said: “We are pleased with the interest shown by participating companies and wish to provide them with more time to complete their assessments.”
Bid round
e new round comprises 19 blocks grouped into five clusters, with prospective operators incentivised to acquire contiguous acreage. With three offshore fields now at varying stages of development, the government is more advanced in e orts to secure new export outlets than was the case in 2017.
Ahead of a visit by Brazil’s new President Jair Bolsonaro, Israeli Energy Minister Yuval steinitz said in March that Petrobras had agreed to bid, while the same month, reports emerged sug- gesting that Us super-major ExxonMobil was considering participation. As was the case in the 2017 auction, each block comprises an area of around 400 square km.
However, in order to encourage the acquisi- tion by a single company or consortium of mul- tiple contiguous licences, the acreage has been divided into ve “clusters” – four of these com- prising four blocks and one encompassing three. e Us$2.5 million “basic participation guaran- tee” paid for the rst block falls to Us$500,000 for each additional block purchased within the grouping.
“ e decision to market the blocks in zones is to allow better correlation between the explora- tion areas and subsurface geological structures that potentially contain oil and gas structures,” the ministry’s statement said at the time.
e acreage is all located in the southern and
central parts of Israel’s Exclusive Economic Zone (EEZ), o ering some potential cost advantages but lying far from the major existing elds of leviathan, Tamar, Karish and Tanin.
licences will have an initial duration of three years, which will be extendable by two years on condition of a commitment to drill at least one well during the period and by a further two years contingent on a promise to drill a well in each of the licences acquired.
Concerns
But despite the early enthusiasm and talk of Petrobras and ExxonMobil being involved, it seems that all may not be going to plan.
One senior Israeli industry source told Mid- dle East Oil & Gas (MEOG): “My view is that if they postponed it is because nobody bid.”
The source continued: “Had a couple of serious companies bid, I doubt very much they would have postponed, so my view is [that this has come about because of] lack of interest, not requests by companies.”
Indeed, if ExxonMobil and Petrobras had submitted bids, it seems somewhat unlikely that the ministry would have pushed the deadline back. “I don’t believe such companies need extra time,” the source added.
However, Dr Amit Mor, CEO of local rm Eco Energy Financial & strategic Consulting told MEOG that the government would have pushed the deadline back further if it was trying to buy time.
“Had it wanted to allow more time for attract- ing additional parties to participate in the tender, the government would have postponed the sub- mission date by several months, as it did in the rst round,” he said.
MEOG understands that the main concern among prospective bidders has been the lack of market into which to sell any gas they might dis- cover. Meanwhile, “the fact that the bid is closing just when gas prices are at an all time low doesn’t help psychologically although companies will
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w w w . N E W S B A S E . c o m Week 23 11•June•2019