UPDATE 1-Israel eyes gas bonanza from large offshore find

Sun Jan 18, 2009 9:47am EST

Related Topics

(Updates throughout)

By Steven Scheer

JERUSALEM Jan 18 (Reuters) - A U.S.-Israeli exploration group said on Sunday it has discovered large natural gas deposits in the eastern Mediterranean with the potential to meet Israel's gas needs for well over a decade.

Led by Noble Energy (NBL.N), the group said it found more than 3 trillion cubic feet (88 billion cubic meters) of gas at the Tamar exploration well, 90 km off the Israeli northern port of Haifa.

News of the deposit, which is three times as large as a site already in production off the country's southern coast, sent energy shares soaring in a country anxious to reduce its dependency on foreign fuel.

"This is one of the most significant prospects that we have ever tested and appears to be the largest discovery in the company's history," Charles Davidson, Noble's chief executive, said in a statement.

"Early indications are that the resources identified are very substantial, at least equal to our pre-drill estimated gross mean resources of over three trillion cubic feet. Subject to the collection of additional data, the resource estimate for Tamar could further increase," he said.

Noble Energy owns 36 percent of the site while Isramco Negev (ISRAp.TA) owns 28.75 percent and Avner Oil Exploration (AVNRp.TA) and Delek Drilling (DEDRp.TA) 15.625 percent each. Dor Gas Exploration owns 4 percent. Delek and Avner are units of conglomerate Delek Group DELKG.TA.

"We are witnessing an historic moment in Israel's energy market," National Infrastructure Minister Binyamin Ben Eliezer said in a statement. "If it turns out in a few weeks that the indicators received in recent days are true, then we are talking about the biggest find in Israel's history."

He said the Tamar drill does not resolve all of Israel's energy problems but undoubtedly improves the country's position. It will not take the place of other projects being advanced, including one for liquefied natural gas (LNG).

DEMAND HIGH

Petroleum Commissioner Yaakov Mimran said if early findings are validated the site would meet Israel's demand for 15 years.

"I have no doubt this discovery will boost investments and exploration" in Israeli waters, Mimran said.

Analysts estimated the natural gas was worth about $26 billion and will be sold starting in 2013.

"It could solve the country's gas problems for many years and generations to come," Yitzhak Tshuva, who controls Delek Group, told Army Radio. "We now won't be dependent on others for gas, and we'll even be able to make exports."

Shares in Isramco were up 122.4 percent in late Tel Aviv trade, while Avner shares gained 29.5 percent and Delek Drilling 42.7 percent. Delek Group was 54.6 percent higher.

Israeli brokerages raised their ratings and target prices for Delek Group as a result of the find.

"This ... frees up the need for foreign (gas) sources in the coming decade," analysts at Psagot wrote.

Israel is receiving natural gas from Egypt under a 20-year deal made in 2005.

($1 = 3.86 shekels)

(Additional reporting by Tova Cohen; editing by John Stonestreet)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.