A Share of the Eastern Mediterranean’s Gas Fields Up For Sale

on Sep 13, 2012
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As of September 11th, he owners of Leviathan, a giant gas field off the coast of Israel, have notified the Tel Aviv Stock Exchange (TASE) that they have received offers for the acquisition of up to 30 percent of their natural gas license rights.

The Leviathan gas field was discovered in December 2010 and became the largest deepwater gas reservoir found anywhere in the world over the past decade. It dwarfs the previously discovered Tamar field despite Tamar’s impressive 10 trillion cubic feet of natural gas. The available resources of both fields taken together will be enough to meet Israel’s domestic demand for at least the next 25 years and still leave hundreds of billions of cubic feet to be shipped abroad. The government is forecasted to cash on some $140 billion from the development of the fields in the next three decades – a staggering amount for a relatively small economy.

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According to the US Geological Survey there are more than 120 trillion cubic feet of undiscovered natural gas in the subsea area running from Egypt to Turkey known as the Levantine Basin. If these estimates turn out to be true Israel’s reserves will be one of the 25 largest in the world – a huge economic leap for a country, which has previously been forced to import every drop of fuel to meet its energy demands.

!m[](/uploads/story/356/thumbs/pic1_inline.png)Noble Energy (NYSE:NBL), the large American oil & gas exploration and production company, discovered the Leviathan field and currently holds a 39.66 percent stake in it. The rest belongs to three Israeli oil companies – Avner Oil and Gas (PINK:AVOGF) and Delek Oil&Gas (PINK:DRKOF) each have 22.67 percent, while Ratio Oil Exploration (PINK:RTEXF) holds the remaining 15 percent.

The Israeli Leviathan companies have stated on several occasions that they are looking into bringing in a strategic partner to finance the project, as well as help them navigate through the deep political waters. The discovery of the giant field has worsened the already icy relations between Israel and its Arab neighbours. In the beginning of 2011, Lebanon claimed Leviathan extends into its territory and Hezbollah went so far as to accuse Israel of stealing Lebanese gas. The self-made billionaire and owner of Delek, Yitzhak Tshuva commented on how important the field is for Israel: “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.” Prime-minister Benjamin Netanyahu has called the discovery “manna from heaven”.

In a review of the global gas industry, Barclays Capital has given a “positive” outlook to Israel’s energy exploration and production industry but also added that a new farm-in partner in Leviathan may improve that grade even more. “Leviathan is one of the largest natural gas discoveries globally in the past decade, and commercializing the resource will require the introduction of strategic partners.“ noted Barclays in their report.
Noble Energy and his partners have already received offers from “leading international companies that work in the field of natural gas exploration and production” and HSBC has been hired to facilitate the sell.

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