Israel wants 2-3 new energy firms to drill off its coast

JERUSALEM (Reuters) - Israel began accepting bids this week from energy companies to drill for oil and gas in 24 offshore blocks, and its energy minister said that in the end he would be happy choosing just two or three foreign exploration groups.

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Upon announcing the tender, Israel released new geological data pointing to a good probability that large natural gas deposits are buried off its Mediterranean coast.

“The preferred outcome is that at the end of the tender we can choose two, three companies that present serious, concrete and relatively fast work plans,” Energy Minister Yuval Steinitz told Reuters in an interview on Wednesday.

They could bid together with local partners, but each group must have a foreigner, he said, “because today in Israel there still are no serious operators”.

The only foreign operator currently in Israel, Texas-based Noble Energy, has discovered two huge fields, Tamar and Leviathan.

Companies have until April to bid and winners will be chosen in July.

The tender comes after the government finalized in May regulation over issues such as taxes and exports following years of uncertainty that scared off investors.

“In this industry you are either in a coma or moving forward,” Steinitz said. “We chose now to come out of the coma and inject a lot into developing the country’s energy market and the gas and oil reserves.”

In the past, large energy groups have been hesitant to enter the Israeli market, fearing a backlash from oil-rich Arab states hostile to Israel.

Steinitz said he was less worried about that, as Israel is now more involved in regional partnerships and because hostility toward Israel among Arab countries with no diplomatic relations has diminished.

“Those who understand the realpolitik of the Middle East understand that (the potential for backlash from Arab states) has really faded,” he said.

Some of the world’s biggest offshore natural gas fields from the last decade were discovered in the eastern Mediterranean - in Israeli, Egyptian and Cypriot economic waters - and Steinitz said the basin was on the rise while reserves in the North Sea were dwindling.

“Europe needs a replacement for that gas from the North Sea, and many see the eastern basin of the Mediterranean as a possible substitute,” he said.

The Energy Ministry has been helping to negotiate export deals to Turkey and Egypt, and, together with the European Union, is studying building a 5.2 billion euro ($5.6 billion) pipeline across the sea to Cyprus, Greece and on to Italy.

He declined indicate which option Israel preferred, but emphasized that one export pipeline would probably not suffice.

Editing by Mark Potter