Yitzhak Tshuva: Gas finds impact geopolitical standing

"The chances of finding gas are very, very high."

Delek Group Ltd. (TASE: DLEKG) controlling shareholder Yitzhak Tshuva is optimistic about the chances of another major natural gas discovery at the Leviathan site. In response to the preliminary results of the 3D seismic survey of the structure published by Noble Energy Inc. (NYSE: NBL), he said that the discovery will change Israel's geopolitical standing in the world.

"The chances of finding gas at the Tamar site weres 35%, whereas the chances at the Leviathan site is 50%," Tshuva told “IDF Radio" (Galei Zahal). "This means that the chances are very, very high."

Tshuva repeatedly used the word "huge" in reference to the potential Leviathan gas discovery, and that it could be even bigger than Tamar.

"We can say with full confidence that the potential is huge, on the basis of the 3D seismic survey," said Tshuva. "We've reached huge achievements that will turn Israel into a big and strong player in the international market."

In response to a question about possible higher royalties to the government on gas sales, Tshuva said that contracts must be honored. Any changes at this stage, after the discoveries, are liable to drive away foreign investors in the gas exploration sector.

"We don’t need to reach an agreement with the Ministry of Finance," said Tshuva. "When you drill, you drill on the basis of a license, and we're operating on the basis of the same license and at the same terms. There have been 500 barren wells in Israel. The people who lost money cannot ask for refunds from the Ministry of Finance, because they operated on the basis of licenses that stipulated that if they found, they'd get, and if not, then no. We must not lose these investors, and future investors. We must pursue the exploration momentum. This is geopolitical power that Israel needs now more than ever. Israel will become a big international player, and it will have geopolitical power vis-à-vis many countries."

Noble Energy owns 39.66% of the Amit and Rachel licenses, which form Leviation, Delek Group subsidiaries Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 22.67%, and Ratio Oil Exploration (1992) LP (TASE:RATI.L) owns 15%.

Delek Group's share price rose 8.6% in early trading to NIS 836, Delek Drilling's share price rose 18% to NIS 10.58, and Avner's share price rose 14% to NIS 1.74. Ratio's share price rose 50.3% to NIS 0.227.

Published by Globes [online], Israel business news - www.globes-online.com - on June 3, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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