Barclays, Deutsche Bank greet new gas find

BoI Governor: US tariffs could push up inflation in Israel

Barclays: Myra and Sarah will break the monopoly of the Tamar and Leviathan consortium.

Barclays Capital and Deutsche Bank are both upbeat on the gas and oil discovery announced by the Myra and Sarah licensees. Barclays Capital says, "This new information is likely to drive more interest to the area from both the energy world as well as the financial world." Deutsche Bank says, "The chances of success are extraordinarily high, significantly higher than Tamar… and higher than Leviathan.

Taking an overview, Barclays adds, "Since January 2009 over 30 trillion cubic feet of natural gas has been targeted for drilling post 3D seismic imaging. So far, Noble Energy Inc. (NYSE: NBL) and GeoGlobal Resources Inc. (AMEX: GGR) are the only active operators in the region and there are only two active rigs. The potential resources are a positive for the Israeli government which has become increasingly concerned that the Tamar consortium would be an effective monopoly in supplying gas to Israel and these licensees could help break that perception."

Deutsche Bank says that the Myra and Sarah discovery will affect Tamar and Leviathan in contrasting ways: the additional gas discovery of could make a LNG project more cost effective for Leviathan, but it could put pricing pressure on the Tamar project, which until now only had expected competition only from Egyptian gas imports, which have recently proven unreliable. Tamar gas will be directed towards the domestic Israeli market, and today's announcement could delay or reduce the sizes of potential contracts for Tamar, as customers may prefer to await further developments at Myra and Sara before concluding large contracts with Tamar."

Deutsche Bank adds that the Myra and Sarah owners say that they cooperate on exports with the Leviathan partnership (Noble Energy, Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L)), and to compete in the domestic market with both Leviathan and Tamar (owned by Noble Energy, Delek Group, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Alon Natural Gas Exploration Ltd. (TASE: ALGS)).