Israel becoming Jordan's chief supplier of natural gas
Israel has signed an agreement to provide the Kingdom of Jordan with $15 billion worth of natural gas from its Leviathan well over the next 15 years. The Leviathan well is located some 81 miles west of Haifa. It's the largest natural gas deal Israel has ever signed and will make Israel the Kingdom's
chief natural gas supplier.
The new deal is the largest collaboration with
Jordan to date, and will make Israel its chief supplier, according to
the Globes business news website.
The final agreement will be subject to the
approval of Energy and Water Minister Silvan Shalom, who is expected to
confirm it. According to Globes, the US was involved in the
negotiations. US envoy Amos Hochstein was said to attend the signing of
the memorandum.
Representatives of the Delek Group Ltd. and Nobel Energy Inc. were in Jordan to sign the agreement.
Shalom hailed the agreement, and referred to
it as “a historic act that will strengthen the economic and diplomatic
ties between Israel and Jordan.”
“At this time, Israel is becoming an energy
superpower, which will supply the energy needs of its neighbors and
strengthen its standing as a central source of energy supply in the
region, and I welcome it,” he said in a statement.
In February, Israel signed a deal with Jordan
to supply $500 million worth of gas to the Hashemite kingdom from the
Tamar natural gas field in the Mediterranean.
The Jordanians turned to Israel because their
supply of natural gas from Egypt had been halted by repeated terrorist
attacks on the gas pipeline from Egypt, a Channel 2 report said.
I'm sure the Egyptians are thrilled.... Well, like we always say, business is business.
Labels: Jordan, Leviathon well, natural gas, oil and gas exploration
#BDS_FAIL: 'Palestinians' first buyers of Israeli natural gas
The BDS'ers are seething. Israel's Leviathan natural gas well has entered into its first contract. And the contract is with... the '
Palestinians.'
The first buyer of natural gas from Israel’s largest gas field will be
the Palestine Power Generation Company, which will purchase some $1.2
billion-worth of gas over 20 years, one of the major partners in the
field announced on Sunday.
The Leviathan group will sell the [Palestine Power Generation Company] PPGC, which
supplies power to Palestinian areas in the West Bank, as much as 4.75
billion cubic meters of gas when the Leviathan reserve begins to yield
in 2016 or 2017, the Delek Group said in a statement.
The Delek conglomerate owns 45.34 percent of
the field, followed by the US-based Noble Energy with 39.66% and Ratio
Oil Exploration’s 15%. Leviathan’s estimated reserves – 537 billion
cubic meters – make it the largest offshore gas discovery in a decade.
The Palestinian company aims to build a $300
million power plant in the West Bank city of Jenin to produce
electricity from the gas,
Reuters reported.
Given the 'Palestinians'
track record on payments, maybe we shouldn't be so happy about this one....
Labels: BDS, Israel Electric Corporation, Leviathon well, natural gas, oil and gas exploration, Palestinian Authority
Turkey turns down Israeli offer to build gas pipeline
Turkey has turned down an Israeli offer to
build a natural gas pipeline through its territory. The pipeline would have also allowed Israel to export natural gas directly to Europe.
“Israel has made a bid to build a pipeline to Turkey within the last two weeks,” the Hurriyet
quoted the official as saying. “But we have a policy regarding Israel
and the claims that Turkey leans towards this idea is not true.”
The pipeline would allow Israel to sell gas to Europe, but the
Turkish government has not given a response because of the tensions
between the countries.
This follows reports from Yediot Ahronot that
two Israelis held two meetings in Turkey with the country's energy
ministry officials in order to present the offer. The story was reported
in the Turkish daily Vatan on Thursday, according to the report.
I think that's called cutting off your nose to spite your face....
Labels: Leviathon well, natural gas, Turkey
Australia's second largest producer invests $700 million in Leviathan
Australia's second largest gas producer, Woodside Petroleum, has purchased a 30% stake in Israel's Leviathan gas well, and will make an
initial investment of nearly $700 million.
Woodside will acquire a 30 percent interest in the Leviathan field,
estimated to contain 17 trillion cubic feet of gas, from partners Noble
Energy Mediterranean Ltd., Delek Drilling, Avner Oil Exploration and
Ratio Oil Exploration, the Perth-based company said Monday in a
statement.
“Being selected as the Leviathan joint venture’s preferred partner in
a competitive bidding process demonstrates the value of our LNG
development capabilities,” Chief Executive Officer Peter Coleman said in
the statement. Woodside will be the operator of any liquefied natural
gas development of the field. “Acquiring an interest in these permits is
an exciting opportunity to grow our portfolio in the emerging Eastern
Mediterranean basin and we look forward to finalizing the agreement.”
In
addition to the $696 million initial payment, Woodside has agreed to
pay $200 million once laws permitting Liquified Natural Gas (LNG) export
from Israel are in force, and $350 million on a final investment
decision in relation to an LNG development.
"This is a company
with an excellent reputation that will position Israel as an important
player in the global LNG market," said Igal Landau CEO of Ratio Oil
Exploration. "It is impossible to minimize the important impact of this
process on Israel's energy sector and the economy in general."
Speaking
during a conference call Monday, Woodside's Coleman declined to put a
time frame on construction of an LNG plant, but said design work on the
project had already begun, according to the Financial Review. “We want
to pursue it as quickly as we can,” he said.
With all the talk about boycotts, they just keep on buying....
Labels: Leviathon well, oil and gas exploration
Israel stepping up protection for gas drilling platforms
Israel is stepping up
protection of its gas drilling platforms off the Mediterranean coast.
Missile boats have stepped up missions around the Tamar and Leviathan platforms over the past year, as well as coordination with private security firms contracted by the US-Israeli exploration consortium, the official said.
"We have replicated the arrangements already in place at Yam Tethys," the official said, referring to another Israeli gas field 40 km (25 miles) off southern Ashkelon port, near the waters of Gaza.
Tamar and Leviathan, in which Israel sees a potential pipeline to energy independence, are around twice and three times as far out to sea, respectively. That challenges Israel's small navy, which is more accustomed to close coastal patrols.
The Israeli military's newspaper Bamahane said the navy was undergoing expansion including the appointment of a commodore to handle the induction of two more German-made submarines and address "the new need to protect the drilling rigs".
Bamahane did not elaborate, but experts have long voiced concern that Tamar and Leviathan could be targeted by Lebanese Hezbollah guerrillas given Beirut's complaints at what it deems Israel's unilateral exploration in the absence of an agreed maritime border. The two countries are technically at war.
"One danger is a proximity attack, by frogmen, by boats, by terrorists in some fashion," Giora Eiland, a former Israeli national security adviser, told the Globes business journal in May.
"Another, bigger challenge is how to face the threat of missiles, because today you can launch missiles from tens of kilometres away," he said.
Israel and Cyprus, which is doing its own drilling for eastern Mediterranean gas in consortium with Texas-based Noble Energy, are also mindful of Turkey's naval assertiveness in the area.
It sounds like we need to expand our navy in a hurry.
Labels: Cyprus, Hezbullah, Leviathon well, oil and gas exploration, Tamar natural gas well, Turkish obsession with Israel, Turkish occupation of Cyprus
Lebanon likely loser in maritime resouce battle
After explaining that the battle between Israel and Lebanon over maritime resources is actually a four-way battle among Israel, Cyprus (which entered into a
maritime demarcation agreement this week with Israel), Lebanon and Turkey, James Dorsey explains that
Lebanon is the likely loser in that battle.
According to Dorsey, however, the protagonists are already taking action to address the legal void. "It's international waters, so you state your claim and whoever gets there first gets an advantage," he said. The Israelis now have that advantage, which Dorsey likened to "the old Marxist principle of possession is ownership."
While Turkey has stayed notably quiet on the latest Israel-Cyprus demarcation agreement, Lebanon disputes it on the grounds that Israel is laying claim to an area that partially infringes on territory claimed by Lebanon last year, a claim since recognized by the United Nations.
But Dorsey said that Lebanon's options for enforcing its claim are limited. The Lebanese could attempt to take legal action by bringing the claim to an international court or by petitioning the United Nations to intervene. But those efforts are sure to be long and tedious, said Dorsey, who added that Lebanon lacks a serious military option.
"I don't think they have a real option in terms of trying to change things on the ground, and I think the best you're going to see is a lot of saber rattling," he said. "It's motion without movement."
Furthermore, while there may be an ultimate need to accommodate Lebanon, the Israelis are loathe to do so, said Dorsey, particularly given the recent rise of Hezbollah within the Lebanese government.
"The Israelis at this point have no reason to be nice," he said. "I think what's going to happen is that the Israelis are going to go ahead and explore and produce, and so will the Cypriots and the Turks. And the Lebanese are going to have trouble getting their act together, so there will be nothing they can do about it."
Heh.
Israel Radio reported on Thursday that the actual area claimed by both Lebanon and Israel is about 20 kilometers (12 miles) wide and that no one knows for sure whether there is natural gas underneath those waters. Both the
Tamar and
Leviathan gas wells are clearly on the Israeli side and not claimed by Lebanon.
But the real key here is that like the
Shaba Farms and
seven villages claims, Hezbullah is looking for sources of conflict to maintain a territorial dispute between Lebanon and Israel. In that respect, it doesn't matter how much territory there is or how much gas there is underneath it.
What could go wrong?
Labels: Cyprus, Israel, Lebanese-Israeli maritime borders, Lebanon, Leviathon well, seven former Shiite villages, Shaba Farms, Tamar natural gas well, Turkey
The UN changes its mind
You will recall that just last week, the United Nations said it
could not get involved in a dispute created by Lebanon over possible oil and gas wells off the Mediterranean coast of both Israel and Lebanon. Well, I'm sure you'll all be shocked - just shocked - to hear that since it might give the UN a chance to take billions of dollars in oil revenue away from Israel, the UN has decided that
it will get involved after all.
A United Nations official said the international body is willing to assist Lebanon demarcate its naval border with Israel to protect the country's gas reserves.
Michael Williams said Lebanon has every right to benefit from its potential off shore oil and gas resources.
His comments in Beirut Monday followed a request by Lebanon for the UN to protect the country's gas reserves along the maritime border with Israel, after a huge gas field was discovered off the coast.
The appeal was part of a growing dispute between the two warring countries over natural resources beneath the eastern Mediterranean.
What could go wrong?
Labels: Lebanon, Leviathon well, oil and gas exploration, United Nations
Lebanon asks UN to protect its oil and gas resources; UPDATED
Continuing to create conflict where none exists, Lebanon asks the UN to protect its oil and gas resources from Israeli encroachment. There are two small problems with the request. Lebanon has yet to even start exploring for any oil and gas resources, and may not have any. Israel has not done any exploration beyond the likely recognized maritime border between the two countries (see map).
So what's the fuss about?
[Lebanon] said Foreign Minister Ali al-Shami wrote to Ban asking him to “exert every possible effort to prevent Israel exploiting Lebanon’s maritime hydrocarbon resources which fall within its exclusive economic zone”.
Shami’s letter came a week after Texas-based Noble Energy and its Israeli exploration partners said the Leviathan prospect — 130 km (80 miles) off the Israeli port of Haifa — was the world’s biggest deepwater gas find in the past decade.
Lebanon says that seismic surveys have identified promising quantities of natural gas in its own waters.
But Israel, which fought a month-long war with Lebanese group Hezbollah in 2006, has no agreed maritime border with Lebanon. Lebanese politicians say they fear Israel may drill in Lebanon’s waters or extract gas from common fields. Israel has said the gas falls within its own waters.
Well, look at the map. Do you see any basis for saying it's not in Israel's territorial waters?
Shami stressed “Lebanon’s right to exploit fully its hydrocarbon resources, which fall within its exclusive economic zone, based on legitimate rights established by international law,” according to the news agency.
“Any Israeli exploitation of this resource would be a blatant violation of these laws and an attack on Lebanese sovereignty,” he added.
But Israel hasn't exploited resources that might belong to Lebanon and doesn't plan to exploit those resources. So what's the fuss about?
The answer, of course, is that Lebanon, like all the Arab countries, doesn't accept Israel's 'right to exist' and therefore doesn't accept that Israel has any maritime rights. And you thought Shimon Peres was going to solve all of our problems by turning the entire country into an
artificial island in the middle of the sea. So much for that idea.
UPDATE 11:28 AMThe UN has told Lebanon that it
refuses to get involved.
The U.N. will not define the Lebanese-Israeli maritime border after the Israeli recent discovery of a major gas well across their border, U.N. Spokesman Martin Nesirky said.
His remarks came to confirm a statement by the United Nations Interim Force in Lebanon (UNIFIL).
Nesirky said the U.N. position is "what UNIFIL said."
He said UNIFIL's mandate - among others to monitor the coastal waters in conformity with Security Council resolution 1701 - "does not include delineating maritime lines. We are talking about two different things: coastal waters and a disputed boundary."
Heh.
Labels: Lebanon, Leviathon well, oil and gas exploration, Shimon Peres
How Leviathan changes the Middle East
The Wall Street Journal looks at some of the fallout of Israel's massive new gas discovery, known as
Leviathan (Hat Tip:
Memeorandum). Like the media here in Israel, much of the attention is focused on the Israeli government's likely effort to retroactively increase the royalty rates on the existing leases, including Leviathan.
Earlier this year, Finance Minister Yuval Steinitz said he was considering changing terms retroactively—meaning the government could extract better terms on previously assigned leases. Noble and Israeli oil executives went on the offensive.
A retroactive change would be "egregious" and "would quickly move Israel to the lowest tier of countries for investment by the energy industry," Noble's chief executive, Chuck Davidson, wrote Mr. Steinitz in April.
The company enlisted high-level negotiators, including the U.S. State Department and former President Bill Clinton, to lobby against any change.
Mr. Clinton raised the issue in a private meeting with Israeli Prime Minister Benjamin Netanyahu in New York in July, according to a Clinton aide. "Your country can't just tax a U.S. business retroactively because they feel like it," the aide said Mr. Clinton told Mr. Netanyahu.
Mr. Netanyahu was noncommittal, the aide said. A spokesman for Mr. Netanyahu declined to comment on the meeting.
Finance Minister Steinitz has so far ignored the pressure. Last month, he said a government-appointed committee had made preliminary recommendations to abolish tax breaks for energy firms and impose steep tax increases of 20% to 60% on windfall profits. Any tax changes are subject to approval by Israel's cabinet.
"Israel is sovereign to make its own decision and change its tax regime," Mr. Steinitz said in an interview.
My guess is that there will be some increase in the tax rates to bring them more in line with the practice in other Western countries. By the way, from the little I know of our tax law on this issue I don't believe we have an oil depletion allowance, which has been a fixture in the US for 50-60 years (at least). Perhaps that could be a tradeoff with the oil exploration companies.
But the Journal actually has little to say about how the natural gas discovery changes the Middle East.
On Wednesday, the frenzy got fresh fuel: Noble confirmed its earlier estimates that the field contains 16 trillion cubic feet of gas—making it the world's biggest deepwater gas find in a decade, with enough reserves to supply Israel's gas needs for 100 years.
It's still early days, and getting all that gas out of the seabed may be more difficult than it seems today. But Noble and its partners think the field could hold enough gas to transform Israel, a country precariously dependent on others for energy, into a net-energy exporter.
Such a transformation could potentially alter the geopolitical balance of the Mideast, giving Israel a new economic advantage over its enemies.
...
Even before Leviathan, a series of finds had put the so-called Levant Basin, stretching offshore in the Mediterranean, on the international energy map.
In March, the U.S. Geological Survey released its first assessment of the zone, estimating it contained 1.7 billion barrels of oil and 122 trillion cubic feet of gas. That's equal to half the proven gas reserves of the U.S.
Much of that gas hasn't been found yet. Even if it is found, it's still less gas and oil than the Arab countries have, it won't make the West dependent on us the way they are dependent on the Arabs, Russia and Iran, and anti-Semitism (which still exists and likely always will) will likely temper any moves in Israel's favor.
Moreover, the business community is very concentrated and closed. I recognized just about every name in the Journal article, and even have done business with one of those people in another field. In the best case scenario, the average Israeli will save some money on his or her utility bills. Any taxes the government collects will be used to spend more and will not be passed on in the form of lower taxes.
Change? Not likely.
The picture at the top is a rig at the nearby Dalit well.
Labels: Leviathon well, oil and gas exploration, oil depletion allowance, windfall profits
$95 billion in natural gas discovered off Haifa coast
A joint US - Israeli drilling project has discovered
$95 billion worth of deposits of natural gas off the Haifa coast.
The largest reserve of natural gas, over 16 trillion cubic feet, has been discovered off the coast of Israel, and is estimated to be worth more than $95 billion, U.S. company Noble Energy Inc. announced on Wednesday.
Noble Energy owns 39.66% of the prospective discovery, alongside Israeli partners Delek Group Ltd. units Avner Oil and Gas LP and Delek Drilling LP (22.67% each), and Ratio Oil Exploration (1992) LP with 15%.
The reserve, Leviathon, is the largest amount of natural gas discovered in the world in the last decade and is located in approximately 5,400 feet (1,645 meters) of water, about 130 kilometers offshore of Haifa and 29 miles (47 kilometers) southwest of the Tamar discovery.
Last year, Israeli company Isramco announced that reserves of natural gas have been discovered at its Tamar 1 offshore drill site 90 kilometers west of Haifa, making it the largest ever discovered in Israel until now - three times bigger than that of the "Yam Thetis" consortium and worth $15 billion.
Noble Energy CEO Charles Davidson said, "Leviathan is the latest major discovery for Noble Energy and is easily the largest exploration discovery in our history."
CEO of Delek Group Yoram Turbowitz said "it is a sense of success mixed with worry and concern, that we will not be able to utilize the huge discovery in our hands to its limits.
He added: "I hope that the strategic advantage and the enormous accomplishment that we have made here due to large financial and professional knowledge invested will be utilized to its fullest."
"Obviously we need to produce something from the Leviathon reserve, but it will demand enormous investments in infrastructure," he said, adding that "the state will need to assist with regulations, planning and accompanying what will become the largest infrastructure project in the country."
Noble Energy president and COO David L. Stover said, "This discovery has the potential to position Israel as a natural gas exporting nation. For nearly a year now, we have had a team evaluating market possibilities, which includes various pipeline and LNG options. It's our belief that the natural gas resources at Leviathan are sufficient to support one or more of the options being studied. We are excited to be leading the exploration and development in this new basin and look forward to determining the best development option."
This was the lead story on all of the nightly newscasts. It's very significant for us economically. It should lower energy costs and make us energy independent for many years to come.
Labels: energy independence, Leviathon well, natural gas, Noble Energy
