"Drilling an oil well is a major technological challenge, and it has never been done in the East Mediterranean Basin," Ratio Oil Exploration (1992) LP (TASE:RATI.L) CEO Yigal Landau told the "Globes" Israel Business Conference today. "Gas is a separate matter, unrelated to the oil market, and prices do not go hand in hand either. As for oil, there is a pioneering effort underway, which will have huge repercussions on the entire exploration industry in Israel's exclusive economic zone, and probably on Cyprus's as well."
Landau spoke about the chances of finding oil at the recent offshore gas discoveries, on the conference's "Sources of energy-high tension" panel, which discussed the impact of energy prices on the global economy, and Israel's place in the global energy market in view of the offshore natural gas discoveries. The other panelists were International Energy Agency Deputy Executive Director Ambassador Richard Henry Jones, Delphi Global Analysis Group founder David Wurmser, ATP Oil & Gas Corporation (Nasdaq: ATPG) president Leland Tate, Citigroup managing director and Global Head of Commodities Research Dr. Edward Lewis Morse, Delek Drilling LP (TASE: DEDR.L) CEO Yossi Abu, and Cypriot Director of Energy Service Solon Kassinis. "Globes" energy reporter Amiram Barkat was the panel moderator.
"The chances of finding oil are currently estimated at 8%, and 16% on the basis of two prospects," said Landau. "These are very low probabilities, which I prefer to call an 'engineering challenge'. We are trying to weigh all the considerations before drilling a well."
As for gas exports, Landau said, "A US Geological Service report estimated Israel's gas discoveries in the Levant Basin at 120 trillion cubic feet. This requires a lot of development. Gas export restrictions will doom further gas exploration, because we're talking about investments of hundreds of millions of dollars for each rig.
"Without the necessary regulatory certainty, which must be settled fast, market player cannot continue to develop the fields," said Landau who went on to attack regulatory problems arising from the government treatment of the oil and gas industry. "The delay in the Sheshinski committee decisions contributed to regulatory uncertainty, and delayed the development of fields by Israeli companies with the relevant licenses. This resulted in losses to both the state and the Tamar partners, which lost revenue this year."
Ratio is a partner in the Leviathan field, along with Noble Energy Inc. (NYSE: NBL) and Delek Group Ltd. (TASE: DLEKG), which are also partners in the Tamar field.
Published by Globes [online], Israel business news - www.globes-online.com - on December 12, 2011
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