The Israeli Ministry of Energy launched its fourth Offshore Bid Round (OBR4) for hydrocarbon exploration in Israel’s exclusive economic zone (EEZ) on 13 December. The area offered for bidding in OBR4 includes 20 exploration blocks, grouped into four zones, with a total area of nearly 5,900km².
Most of the area under offer includes 2D and 3D seismic coverage and other survey data acquired by previous operators. These data sets reveal various prospects and leads with significant potential that have not yet been tested by drilling. In launching OBR4, Israel is aiming to expand its resource base, which today stands at some 900bn m³ of technically recoverable resources. Previous estimates by the US Geological Survey and the Ministry of Energy put potential undiscovered resources at more than 1tn m³.
In October 2022, production began from the Energean-operated Karish reservoir, the third of Israel’s producing gas fields. Israel’s two existing fields, the Chevron-operated Leviathan and Tamar, produced nearly 22bn m³ in 2022, of which around 10bn m³ was exported to Egypt and Jordan, setting a new record. Several projects designed to significantly expand both production and export capacity are in the pipeline, with the first phase of the Tamar Optimization Project reaching FID in late 2022. Demand for natural gas in the Israeli domestic market is also expected to continue growing over the coming years, mainly due to increased electrification alongside the phasing out of coal-fired power plants.
The Israeli EEZ forms part of the East Mediterranean gas province, increasingly recognised as an exploration hotspot. Numerous multi-tn ft³ discoveries in Egyptian and Cypriot waters were announced just over the past couple of years. New discoveries will be supported by increasing efforts and cooperation to promote regional connectivity. In conjunction with neighbouring countries and the private sector, Israel is looking to enhance access from its producing fields into both regional pipeline networks and liquefaction facilities.
Closeness to Europe
A key component of Israel’s attractiveness for hydrocarbon exploration is its proximity to the European market. In light of the Russian invasion of Ukraine and the ensuing energy crisis, the EU has put diversification of gas supply sources high on its agenda, alongside the promotion of renewables and other decarbonisation strategies. In June 2022, the EU, Egypt and Israel signed a memorandum of understanding (MoU) to promote the export of Israeli natural gas to Europe through Egypt. While implementation of this MoU has just begun, its existence and the overall policy context demonstrate Europe’s long-term commitment to its natural gas suppliers and ensure that new discoveries offshore Israel and the larger East Med area will find a ready market.
While Israel may not be a natural gas giant, it does offer several advantages to E&P companies. Offshore facilities are secured by the Israeli Navy, and the security environment is expected to improve with geopolitical changes such as the recent maritime boundary agreement with Lebanon and the increasing cooperation with the Arab world in the context of the Abraham Accords.
Indeed, Emirati company Mubadala has already bought into the Tamar field, and other regional players are considering following in its footsteps. Israel is a beacon of stability in the region, and the energy ministry is working to review regulatory and fiscal policies in order to enhance its attractiveness for potential investors.
Lastly, with one major IOC already operating in Israel and others considering their entry, the industry is signalling its increasing confidence that the country is a good place to do business.
With its emphasis on security and stability, proximity to one of the world’s leading markets, and role in a key exploration hotspot, Israel’s bid round is already attracting attention from significant industry players. With the submission deadline set for 29 June, energy ministry officials are anticipating a competitive process and look forward to granting exploration licences by the end of the year. PE
For more information on Israel’s Offshore Bid Round 4, visit https://www.energy-sea.gov.il/