Israel makes new discovery off its coast
Israel made another discovery off its coast. The newly discovered field, Royee, may hold up to 3.2 Tcf of natural gas according to a statement made by the Israeli partners in the field Ratio and Israel Opportunity who hold respectively 70%, and 10% stakes. The remaining 20% of the field are held by Edison. Royee is located about 150 kilometers offshore Israel close to its maritime borders with Cyprus and Egypt. The field’s size is yet to be confirmed, but current estimates suggest it is the third largest field discovered to date in Israeli waters after the Leviathan discovered by Noble Energy in 2010 and holding up to 22 Tcf of natural gas and the Tamar field discovered by Noble Energy in 2009 and holding up to 11 Tcf of natural gas. An exploration well is expected to begin in the year to come and will cost around USD 100 million.
Israel’s substantial natural gas encounters in its waters could turn the country into a net natural gas exporter. In June 2013, the Netanyahu cabinet approved export quotas and the Supreme Court rejected in October of the same year an appeal against the decision to export about 40% of Israel’s proven reserves. Several letters of intent were signed by the israeli authorities launching talks with regional neighbours for the purpose of exporting natural gas to Egypt, Jordan and the Palestinian Authority via pipeline. The Tamar and the Leviathan partners, Noble and Delek, were said to be in talks to deliver gas to Egypt via an undersea pipeline that originally served to deliver Egyptian gas to Israel. The gas would then be shipped to export markets via Egypt’s unused export facilities. Regional deals remain however fraught with political sensitivities. Jordanian officials for example reject the allegation that the Kingdom will be exporting gas from neighbouring Israel to address the severe energy crisis the country is going through that has caused a spike in its energy bill.
At the EU council for energy ministers, the ministers of Greece and Cyprus pitched the East Med Pipeline project to the EU. The proposed pipeline would run from Cyprus and Israel to Europe via Greece and would assist Europe’s quest to diversify its sources and routes of natural gas. The Levant basin has a substantial potential but the development of the various projects needed to monetize the resources are often not commercially justified by the modest regional natural gas needs. Cyprus has put its onshore LNG terminal project on hold until further exploratory discoveries are made. Lebanon is about to launch its first licensing round, delayed several times due to the country’s inability to agree on major pillars for the energy sector, such as deciding on a model sharing agreement and which blocks to open for licensing first. The Levant basin could constitute a new solution for Europe and make its entry into the natural gas market if the various geopolitical challenges are overcome.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen firstname.lastname@example.org Follow her on Twitter: @karenayat