State of Israel Updates Petroleum Rights List

February 26, 2010 by · 4 Comments 

Israel’s Ministry of National Infrastructures has updated their list of companies that own oil and gas exploration rights in Israel. If a company isn’t on this list it does not have the right to explore for oil and gas in Israel. The exploration rights list (PetroleumRights170210a-1) and exploration rights map (PetroleumRights15_10_09Geogr.jpg) go together to show rights ownership and the location of the rights territory.

The Israeli Petroleum Law states that “petroleum resources belong to the State.” These State owned resources extend beyond the land itself to include Israel’s territorial waters.

The Law governs all exploration and production of all petroleum products. It provides three types of permits to explore for or produce petroleum in the country. The first “preliminary permit” allows the holder to conduct initial prospecting in the permit area with the exception of drilling. This eighteen month permit also gives the holder the privilege of requesting a “priority right” on the permit area. The priority right prevents awarding the area’s petroleum rights to anyone else during the term of the permit. The second permit stage is a three to four year “exploration license.” This license allows the drilling of test wells in an area of not more than 400,000 dunam (100,000 acres). If and when a prospector discovers oil in economically retrievable quantities under the exploration license he may apply for a “production lease.” The production lease term is thirty years, extendable to fifty years.

Just because a company has been granted an exploration or production license in an area doesn’t mean it is granted physical access to the area. Once issued a permit, license, or lease, the holder must also secure permission from other State agencies and property owners to actually conduct activities in the license area. The holder is also required to submit regular progress reports and final reports to Ministry of Infrastructure. All research, test results, studies and any other information produced through exploration efforts are to be submitted to the Ministry as the property of the state.

The production lease gives the lessee the right to market any petroleum produced, subject to the State of Israel preempting the petroleum for its own use. Israel also collects a 12½% royalty on all petroleum produced. All in all, Israel’s petroleum law effectively allows outside commercial entities (the licensees) to finance the exploration and production of oil in the country. Israel benefits by having access to all the exploration data and 12 ½% of all the oil produced.