4 groups submit bids for new natural gas exploration tender offshore Israel

Energy Ministry says a total of 9 companies, out which 5 are new, are in the bidding round for licenses

Sharon Wrobel is a tech reporter for The Times of Israel.

View of the Israeli Leviathan natural gas field gas processing rig as seen from Dor Habonim Beach Nature Reserve, on January 1, 2020. (Flash90/File)
View of the Israeli Leviathan natural gas field gas processing rig as seen from Dor Habonim Beach Nature Reserve, on January 1, 2020. (Flash90/File)

Israel announced on Sunday that four consortia of companies have submitted bids in a new tender to explore and discover additional offshore natural gas fields.

Israel Energy and Infrastructure Ministry said that four groups, consisting of nine different companies, submitted six proposals as part of the tender process to obtain licenses for natural gas exploration in Israel’s economic waters. Out of the nine companies, five are new players in the Israeli market, the ministry said, without disclosing the names of the bidders.

Since Israel first discovered natural gas fields off its Mediterranean coast more than a decade ago, the country has emerged as a gas exporter. The natural gas operations have put the country on a path to energy independence — and have shielded it from the worst of the energy crisis sparked by the Russian war on Ukraine this year — in a region with few natural resources.

Major offshore discoveries, including the Leviathan field, one of the world’s largest deep-water gas discoveries, which contains an estimated 22 trillion cubic feet of gas, have attracted large oil and gas explorers, such as US energy giant Chevron (owner of Noble Energy) to partner with local companies.

Commenting on the new tender, the ministry said that the “scope of the proposals and the variety of bidders will lead to new companies conducting natural gas exploration in Israel’s economic waters.”

The offshore tender marks the fourth bidding process for natural gas exploration in Israel’s economic waters, which the ministry said is directed to boost competition, ensure supply to the domestic market, expand state revenues, and encourage the signing of additional gas export agreements.

Israel offers offshore zones for gas exploration in new tender. (Israel Energy and Infrastructure Ministry)

The current bidding round is a direct continuation of a series of rounds for natural gas exploration that began six years ago, and which led to the drilling of four new exploratory wells, the ministry said.

Back in 2020, Israel started pumping natural gas to Egypt from the Leviathan gas field. In June of last year, Israel, Egypt and the European Union signed a memorandum of understanding that will see Israel export its natural gas to the bloc for the first time. According to the agreement, Israeli gas could be supplied via Egypt’s LNG plants to the EU.

“Energy is power, and the revenues generated for the local economy will be reinvested for the benefit of Israeli citizens,” stated Energy Minister Israel Katz. “The current process will increase competition and stability in supply to the local energy market, strengthen Israel’s geopolitical position in the region and Europe, and enable the signing of additional natural gas export agreements – to turn Israel into an energy bridge connecting East and West.”

The purpose of the fourth bidding round is to increase competition between natural gas suppliers, as well as create additional energy resources for electricity producers, which ultimately it is hoped will lower prices for consumers and will promote the transition of additional factories still using heavy fuel oil and diesel, to switch to natural gas.

As part of the tender, four exploration zones are offered, consisting of 20 blocks, with the winning bid for each zone granted multiple licenses. The the size of the license area will be limited to 400 square kilometers each.

Over the coming weeks, the Energy and Infrastructure Ministry will examine the proposals’ compliance with professional and economic threshold conditions, together with the submitted work plans. The results will be assessed and a final decision about the winners will be taken by the ministry’s Petroleum Commissioner.

Initially, exploration licenses will be granted to the winners of the bid for a period of three years. During this period of time, the license holders will perform exploratory work on the entire license areas, as part of the work program commitments included in their bids. After drilling of at least one well and carrying out the additional work plan, it will be possible for license holders to extend the license period in the cluster by two additional years, up to maximum of seven years, as stipulated in the Petroleum Law.

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