Oil and gas to Israel
Trends and opportunities
In the Levant Basin Province, in the Eastern Mediterranean region, there is an estimated 122 trillion cubic feet of undiscovered, recoverable natural gas. (Source: US Geological Survey March 2010)
Located off the coast of Israel in the Mediterranean Sea is the Leviathan gas field. This is one of the largest global offshore gas discoveries in the past decade. Discovered by US based Noble Energy in 2010, the gas field is estimated at 17 to 19 trillion cubic feet of natural gas. It is believed that investments of over A$40 billion will be required in the natural gas sector in Israel until 2020 for upstream, downstream and energy production infrastructure. (Source: TASC Consulting & Capital Group)
In the Levant Basin Province there is also an estimated 1.7 billion barrels of undiscovered, recoverable oil (Source: US Geological Survey). While gas production is set to rocket, there is strong potential for oil, for both deep offshore reservoirs and a pilot scheme for oil shale. This could potentially unlock several billion barrels of reserves. (Source: Business Monitor International report July 2012)
Investments in electricity generation are expected to amount to about US$10 billion until 2020. (Source: TASC Consulting & Capital Group)
In terms of energy consumption, Israeli industry has been quick in adopting natural gas, reducing energy costs and increasing competitiveness. Power production facilities (government owned and private) are increasingly producing more and more electricity based on natural gas.
There are a variety of long and short term opportunities open to Australian exporters in the Israeli market. Besides opportunities in terms of project finance and supply chains, there is potential to assist in exploration, as service providers, subcontractors and strategic partners. Other than Noble Energy, there aren’t any other significant international operators.
In 2014, an Australian energy logistics company set up a local regional office in conjunction with a local partner in order to capitalise on business opportunities in the wider region.
As Israel’s oil and gas industry moves forward to production, many aspects of the upstream and downstream value chains will be brought to the fore. Being a relatively new industry for Israel, local technical expertise is limited. This will create opportunities in areas such as:
- engineering services
- environmental technologies
- manpower training
- work health and safety management
- consulting services for establishing a regulatory environment
- infrastructure development
- logistical services
The largest local companies, with a market capitalisation of half a billion US dollars and upwards, include Delek Energy (with subsidiaries Avner Oil Exploration and Delek Drilling), Isramco and Ratio Oil Exploration.
There are about a dozen other mid-to-small sized players. Most of the local players belong to recently established The Association of Oil and Gas Exploration Industries in Israel.
As of September 2014, there aren’t any first tier international energy companies active in the local market. Noble Energy, with a market capitalisation of about US$20.19 billion, is the only significant second tier foreign player.
There are several service, equipment and engineering companies from Europe, the United States, Canada and Korea involved in engineering projects and sub-contracting work. Norwegian companies have been prominent in the local energy market.
Tariffs, regulations and customs
The major government regulators involved in the oil and gas industry include:
- The Ministry of Energy and Water Resources
- The Natural Gas Authority
- The Ministry of Environmental Protection
- The Israel Antitrust Authority.
The Ministry of Finance is involved in fiscal policy for large scale infrastructure projects and the Ministry of Interior plays a role in planning/zoning development for natural gas infrastructure projects and public related.
The import procedure for oil and gas industry products is similar to that of other industries. Specific advice can be obtained from local logistics companies and freight forwarders that specialise in this field.
Marketing your products and services
For the best chance of success, a local presence is highly recommended. This can be carried out through a local representative or a fully owned local branch. The best solution should be assessed on a case by case basis.
Links and industry contacts
Natural Gas Authority
Ministry of Finance
Ministry of Environmental Protection
Ministry of Energy & Water Resources
Ministry of Economy
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