Shemen Oil and Gas Resources Ltd. (TASE: SMOG) has obtained permission to drill the Yam 3 well, offshore from Palmachim, from the Southern Regional Planning and Building Commission, after a stormy meeting. The permission was given without a vote, as no counter-proposal was raised. The well's budget was not increased, and drilling will begin on November 25.
The request to drill was approved after the planning commission rejected objections filed by the Society for the Protection of Nature in Israel and Zalul Environmental Association, a divers' organization. The objections were rejected when the Ministry of Environmental Protection unexpectedly withdrew its support for them, citing progress in the ministry's talks with the Ministry of Finance over budget allocations for preparations for dealing with an oil spill.
The Ministry of Environmental Protection's representative on the planning commission warned, however, that the ministry would not support future drilling requests until its drilling oversight and control system was established.
The environmental organization have already said that they would appeal any decision by the planning commission in favor of Shemen Oil. The Israel Union for Environmental Defense has already begun preparing a petition to the High Court of Justice. Since this is a precedent-setting decision, it is not clear whether the environmental decisions will obtain injunctions to stop the drilling until the appeals are filed. If an injunction is granted, the Yam 3 well could be delayed for a long period.
"Globes" recently reported that Shemen Oil is losing NIS 1 million for each day of delay in the drilling of the Yam 3 well, which was supposed to begin on November 15. These costs include the cost of the rig, which is waiting at Limassol in Cyprus.
Published by Globes [online], Israel business news - www.globes-online.com - on November 20, 2012
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