Sources inform ''Globes'' that development of the Gal offshore exploration permit, considered one of Israel's most promising deepwater prospects, has been delayed because it extends from Israel's exclusive economic zone (EEZ) into Egypt's EEZ. The sources said that the borders of the two licenses that make up the Gal prospect, Neta and Roy, were set to ensure that they do not go beyond the borders of Israel's EEZ, but they confirmed that future development of the main prospect would depend on a cooperation between Israel and Egypt.
The issue emerged following the signing of the delimitation agreement marking the border between Israel and Cyprus's EEZ, signed in December 2010. An examination by the Ministry of Foreign Affairs, the Ministry of Energy and Water Resources, and the Survey of Israel, carried out before the Israeli-Cypriot agreement was signed, found a discrepancy between the Israeli-Cypriot maritime border and the Egyptian-Cypriot maritime border, which was agreed upon in their delimitation agreement of 2006. Israel and Egypt do not have a delimitation agreement to market their maritime border.
Under the Egyptian-Cypriot agreement, more than half of the area of the Gal prospect is located inside Egypt's EEZ. It is not clear which Israeli government agency is responsible for the embarrassing and serious cartographical error in delineating the borders of Israel's EEZ and offshore licenses.
A promising 3D seismic survey
A search permit is the provisional right to map an area which may be suitable for drilling an exploratory well for oil and gas. After mapping, the permit holder applies for a license to drill in the area of the prospect (the geologic structures) which may have oil and gas deposits.
On September 16, 2010, Ratio Oil Exploration (1992) LP (TASE:RATI.L) received the full rights to the Gal permit, which covers 1,770 square kilometers at the southwest corner of Israel's EEZ. Ratio carried out a 3D seismic survey of the prospect, which indicated promising findings, which have never been published.
Sources inform ''Globes'' that the center of the seismic survey is a large structure (prospect), which may has substantial quantities of oil and gas. The prospect is located along the geographical line which includes the Tamar and Leviathan discoveries, and geologists believe that this fact offers a strong chance of a gas discovery at Gal.
In an interview with "Globes", Ratio CEO Yigal Landau, "If Leviathan was a call option on Tamar, then Gal is a call option on Leviathan."
Ratio's Gal permit expired on August 15, 2011. The day before, the company asked the Petroleum Supervisor for two exploration licenses - Neta and Roy - for area of the permit, indicating the discovery of structures in the permit area. Ratio also asked the Petroleum Supervisor to decide who would be its partner in the licenses, and offered two options: granting 40% of the rights to ATP Oil & Gas Corporation (Bulletin Board: ATPAQ) (which is now under US bankruptcy protection); or 40% to a consortium of Modiin Energy LP (TASE:MDIN.L) (20%), EZ Energy Ltd. (TASE:EZ) (5%), and well operator GeoGlobal Resources Inc. (AMEX: GGR) of Canada(5%).
The Petroleum Supervisor has not yet announced any decision about the Neta and Roy licenses, since the application was filed over a year ago. Sources say that, during this time, a thorough review was conducted, which found that the borders of the two licenses did not go over Israel's EEZ border. So far as is known, this review was not coordinated with Egypt, but the borders obtained de facto Egyptian approval, as it published tenders for exploration licenses in areas bordering Israel's EEZ. The area of these licenses conform with the borders of the Neta and Roy licenses, suggesting an indirect solution to the diplomatic problem. Energy market sources believe that the Neta and Roy licenses will be released by the end of the year. The Egyptians probably do not accept the borders of the Gal permit, which extends into Egypt's EEZ, and Egyptian approval of the prospect is requirement for its exploration and development.
The Ministry of Energy said in response, "There are no instructions to freeze the handling of Gal. There is no disagreement with Egypt about the EEZ."
Published by Globes [online], Israel business news - www.globes-online.com - on October 23, 2012
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