Oil and gas to Israel
(Last updated: 26 Aug 2013)
Trends and opportunities
The market
Levant Basin Potential
According to the US Geological Survey that took place in March 2010, there are an estimated 122 trillion cubic feet of undiscovered, recoverable natural gas in the Levant Basin Province in the eastern Mediterranean region. In addition, the Levant Basin Province holds an estimated 1.7 billion barrels of undiscovered, recoverable oil.
The recent discovery of the Leviathan gas field by US major explorer/producer Noble Energy is significant on a number of fronts. The field, located off the coast of Israel in the Mediterranean Sea (and part of the larger Levant Basin), is the largest discovery in the history of Noble Energy and the largest global conventional gas discovery in the past decade. Putting the size of the discovery into perspective, the Leviathan field is estimated at 17 trillion cubic feet of natural gas. Perth based Woodside Energy recently announced that it has been negotiating a potential multibillion dollar investment to obtain a 30 per cent stake in the project.
A Business Monitor International report from July 2012, states that “While gas production is set to rocket, strong potential also exists for oil, both in the form of deep offshore reservoirs and a pilot scheme for oil shale, which could potentially unlock several billion barrels of reserves.”
According to the Israel based TASC Consulting & Capital Group, investments of over A$40 billion will be required in the natural gas sector in Israel until 2020, and “Investments in the electricity sector are also expected to be significant, amounting to about US$10 billion until 2020 in the generation segment only.”
Opportunities
A variety of long term and short term opportunities exist in the Israeli market for Australian companies. Local players are interested in business cooperation with Australian companies on the basis of strategic partnerships, project finance and supply chains. Opportunities exist for foreign companies willing to assist in exploration efforts in Israel not just as service providers or subcontractors, but as strategic partners as well.
Following initial discoveries of significant offshore gas deposits over the last 2-3 years, Israel’s oil and gas industry development will continue to move forward to production stages placing many aspects of the upstream and downstream value chains to the forefront.
Since this is a relatively new industry for Israel, local technical expertise is currently limited and this creates business opportunities in a variety of sectors, such as:
- engineering services
- environmental technologies
- manpower training
- work health and safety management
- consulting services for establishing a regulatory environment
- infrastructure development
Competitive environment
Oil and Gas Exploration/Production Companies
Local Players
In terms of market value at the Tel Aviv stock exchange, the largest local companies (with market capitalisation of half a billion dollars and upwards) include Delek Energy, Avner Oil Exploration, Delek Drilling (Avner & Delek drilling are subsidiaries of Delek Energy), Isramco and Ratio Oil Exploration.
Other mid-small sized players worth mentioning (with market capitalisation of 50-400 million dollars) include Nafta, Shemen Oil & Gas, Alon Gas, Givot Olam, Chanal, Cohen Development, Modi’in Energy, Israel Opportunity and Lapidot.
There are other local companies with smaller market capitalisation rates.
Most of the local players belong to a recently established industry association named ‘The Association of Oil & Gas Exploration Industries in Israel’.
International Players
As of November 2012, no first tier international energy company was active in the market although it is reported in the press that some significant international players are currently bidding for a stake in the Leviathan offshore gas field. Some of the more prominent companies named in the press include Gazprom from Russia and Woodside from Australia.
In addition, there are several second-third tier foreign players involved in local activities such as Noble Energy, AGR Energy (both from the US), and Adira Energy (a subsidiary of Canadian AMG Oil). Noble Energy is the most prominent with a significant presence in the market including a large equity stake in the Leviathan gas field and a local office with dozens of employees.
Foreign companies from countries such as Norway and Korea (Daewoo) are also involved in engineering projects and sub-contracting work.
Tariffs, regulations and customs
The major government regulators involved in the oil and gas industry include the Ministry of Energy and Water Resources, the Ministry of Environmental Protection and the Israel Antitrust Authority. The Ministry of Finance is also involved in terms of fiscal and funding policy for large scale infrastructure projects. In addition, the Ministry of Interior plays a role in terms of planning/zoning development for natural gas infrastructure projects and public concerns related to this.
The import regime for products for the oil and gas industry is similar to that of any other industry. Specific advice can be obtained from local logistics companies and freightforwarders that specialise in this field.
Marketing your products and services
For optimal results, a local presence in the market is highly recommended. This can be fulfilled through a local representative or a fully owned local branch in the market, but the best solution needs to be assessed on a case by case basis.
Links and industry contacts
Most of the local players belong to the recently established industry association named ‘The Association of Oil & Gas Exploration Industries in Israel’ which currently has no active website.
Ministry of Finance – www.financeisrael.mof.gov.il/FinanceIsrael/Pages/En/Home.aspx
Ministry Environmental Protection – www.sviva.gov.il/english/Pages/HomePage.aspx
Ministry of Energy & Water Resources – http://energy.gov.il/English/Subjects/water/Pages/AboutWater.aspx
Ministry of Economy – www.moital.gov.il/NR/exeres/B0B48981-357D-446F-AFAC-91A358E93C87.htm
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.