Zion Oil & Gas began re-entry operations this week at their Elijah #3 well in Northern Israel. Israeli drilling company, Lapidoth, erected it’s drilling rig and prepared the site. Zion is scheduled to begin its vertical seismic profile operation in the well early next week after completing wireline logging.
Russia’s Gazprom, the Russian natural gas monopoly, was back in Israel this week meeting with Delek Group executives to ‘examine possible cooperation’ in producing and delivering natural gas to Europe from Israel’s newly discovered massive gas fields in the Mediterranean.
According to a Globes Business report, “Gazprom’s aims are still unclear. The major concern in Israel’s gas exploration sector is that the Russian energy company wants to block possible gas exports to Europe. Even if Israel’s Leviathan is a relatively minor player in the European gas market compared with the Russian giant, the prices agreed upon and types of contracts signed by Israeli companies could create unwelcome precedents from Gazprom’s point of view.”
The report goes on to say that Gazprom is the world’s largest natural gas producer and, unlike other multi-national energy companies, has no concerns over Arab boycott threats.
For more than three years, OilinIsrael.net has been reporting on Gazprom’s attempts to participate in and plans to control the Mediterranean and European gas markets (see “Russia Tried to Buy in to Israel’s Gas Discovery”). Gazprom isn’t merely the world’s largest natural gas supplier, it is a company controlled by the Russian government. Russian President Dmitry Medvedev, was Gazprom’s CEO before taking his current position as head of state.
The prophet Ezekiel wrote: “‘This is what the Sovereign LORD says: I am against you, Gog (Russia), chief prince of Meshek and Tubal. I will turn you around, put hooks in your jaws and bring you out with your whole army …’” (Ezekiel 38:3-4)
“On that day thoughts will come into your mind and you will devise an evil scheme. You will say, “I will invade a land of unwalled villages; I will attack a peaceful and unsuspecting people (Israel) —all of them living without walls and without gates and bars. I will plunder and loot and turn my hand against the resettled ruins and the people gathered from the nations, rich in livestock and goods, living at the center of the land.” (Ezekiel 38:10-12)
The Bible prophesies that, one day, God will ‘put a hook’ in Russia’s jaw to draw it down into Israel, where it will plan to ‘plunder and loot’ an ‘unsuspecting people’. Are Israel’s newly discovered natural gas fields and, eventually, it’s oil the ‘hook’ that draws Russia into Israel? That may be.
But if it’s so, Russia had better take warning in Ezekiel’s prophecy:
“This is what will happen in that day: When Gog (Russia) attacks the land of Israel, my hot anger will be aroused, declares the Sovereign LORD. In my zeal and fiery wrath I declare that at that time there shall be a great earthquake in the land of Israel. The fish in the sea, the birds in the sky, the beasts of the field, every creature that moves along the ground, and all the people on the face of the earth will tremble at my presence. The mountains will be overturned, the cliffs will crumble and every wall will fall to the ground. I will summon a sword against Gog on all my mountains, declares the Sovereign LORD. Every man’s sword will be against his brother. I will execute judgment on him with plague and bloodshed; I will pour down torrents of rain, hailstones and burning sulfur on him and on his troops and on the many nations with him. And so I will show my greatness and my holiness, and I will make myself known in the sight of many nations. Then they will know that I am the LORD.’” (Ezekiel 38:18-23)
If there is an “evil scheme” brewing in the mind of Gog, I would advise Gazprom, and Russia’s President, Mr. Medvedev of the one lesson that continues to repeat itself throughout history: Don’t mess with Israel.
Zion Oil & Gas debuted it’s 2012 Corporate video, “The Joseph Project”, during last week’s National Religious Broadcasters Convention in Nashville, Tennessee. In the video Zion Founder John Brown reviews the company’s mission and vision for Israel. Zion CEO Richard Rinberg and COO Victor Carrillo share their thoughts on the recent and future exploration activities.
Zion Oil & Gas is dedicated to finding and producing oil and gas in Israel.
February 21, 2012, Nashville, TN
Zion President and COO, Victor Carrillo, during a press conference at the 2012 National Religious Broadcasters Convention in Nashville, announced yesterday that Zion plans to re-enter the Elijah 3 well in the Asher-Menashe Exploration territory. Carrillo stated that Zion Oil & Gas plans to re-enter the well bore late this Spring in order to evaluate the well’s production potential and to determine if the well should be completed.
Zion began drilling operations at the Elijah 3 well in October 2009. Their target depth was toward the Triassic geological formation, which was estimated below approximately 10,000 feet (3,048 meters). Zion reached a depth of 10,938 feet (3,334 meters) but temporarily suspended drilling operations in the well following unsuccessful efforts to retrieve a stuck pipe.
Carrillo also announced in yesterday’s press conference, that later this year, Zion plans to begin drilling its first well in the company’s Jordan Valley license.
Zion Oil & Gas hold the largest on-shore oil and gas exploration license area in Israel.
In his October 7 Newsletter, Zion Oil & Gas CEO Richard Rinberg wrote. “Our schedules may change, but today, we believe that it is most likely that Zion’s next well will be drilled in our Jordan Valley License in 2012.”
Earlier this month Zion signed a seismic acquisition agreement with the Geophysical Institute of Israel (GII) to conduct a 2D field seismic survey in its Jordan Valley License area that is scheduled to commence in late 2011 or early in 2012.
I received a comment from a reader (Bill) yesterday; he was worried, as a lot of folks are, about the recent fall Zion’s stock price. Here’s the comment:
“The price today at $1.50. What’s the process at this end. Does the company fall off the board if it hits below a dollar say? Is there limits? Is there continued values to these stocks if the price falls to say .50 cents or less than a dollar, or less than a quarter? I’m not a stock guy, so if you have this type of information, please post it. Thanks!”
I’m not a genie or a guru and, like Bill, I’m “not a stock guy.” I do have my own opinion of the situation, but before I share it, let me tell you a story.
Not quite 2,000 years ago there was a guy – his parents named him ‘Saul’, but he went by ‘Paul’. After a dramatic meet up with G-d on the road to Damascus, Saul/Paul literally ‘saw the light’ and became the world’s most famous Jewish missionary. This did not please the Jews at the time, at least those who held the community’s political and religious power. They were always accusing him of ‘crimes against G-d and against Rome’ (whatever that meant) and as a result, Paul spent a lot of time in court or in jail. Things began to get dicey; there were death threats and plots, and there was a pretty good chance that if Paul let the locals have their way he would meet an ‘accidental’ death on the way to court. Paul played his trump card – even though he was a Jew, he was also a Roman citizen, and as such he had a right to be tried for his ‘crimes’ in Rome, far away from the locals who had promised that Paul would be dead before he made his court date.
The Roman authorities put Paul on a boat to Rome (really it was just a connector boat, but it did get him to the real boat to Rome). While he was sailing on the real boat to Rome a storm came up – a big storm. The crew did all they could but everyone on the ship knew this storm would be the end of them. Everyone but Paul. In the night an angel visited Paul and said (paraphrased), “Look, you’ve got to tell Caesar your story, you’re definitely going to Rome. Don’t worry about your life or the lives of those on the boat, not one person will be injured or die from this storm … but, the ship will run aground on some island.” Paul would fulfill his mission of standing before Caesar; the storm wasn’t a catastrophe, just a detour.
Nice story, but what does it have to do with Zion Oil?
Zion Oil isn’t the only stock in the cellar right now, have you looked at the Dow averages? We won’t even talk about European economies. It ain’t pretty. How about Israel and all this talk at the UN about Palestinian Statehood? That can’t be good. And there sure is a lot of sabre rattling by Israel’s neighbors to the north about offshore drilling. Things are tense, they don’t look good, there’s a storm a-brewing!
The sailors on Paul’s boat threw everything overboard and tried to escape in the lifeboat. Good thing they didn’t, they would have been killed.
When you’re in the middle of a storm the natural thing to do is panic, toss stuff overboard and go for the lifeboats. That’s the natural thing … sometimes the natural thing is the wrong thing. It’s tough to keep the goal in mind when waves are coming into the boat, but storms come, and then they go, and the goal remains.
John Brown was given a vision and a mission thirty years ago; before there ever was a Zion Oil & Gas, before there were any stock prices to worry about, before anyone knew there actually was oil and gas in Israel. In thirty years there’s been a lot of foul weather and a lot of fair weather, but the goal hasn’t changed. I don’t know if Paul’s angel ever visited John Brown in the night, but I do know that there’s oil and gas in Israel and that Zion is committed to finding their share of it. It’s not easy to ignore the storm and keep your focus on the goal. The easy thing to do is cut and run for the lifeboats … it’s just not the right thing to do.
So Bill, I’m not a ‘stock guy’. I’m just a guy on the boat; I know that storms don’t last forever and, eventually, we’ll get to where we’re going. Until then, I’ll look for daylight.
Ratio is the investment bank’s stock pick in the energy sector.
Leviathan partner Ratio Oil Exploration (1992) LP (TASE:RATI.L) is Barclays Capital’s top pick in Israel’s energy sector. The bank reiterates it “Overweight” recommendation but lowered its target price from NIS 0.74 to NIS 0.71, still a 69% upside on today’s opening price of NIS 0.41.After a four-day road show with Ratio CEO Yigal Landau and Geologist Josh Steinberg, Barclays analyst David Kaplan says that the company compares favorably with its European peers. “Even in our worst-case scenario where we drop the oil targets from our valuation entirely we still see 13% upside from the current share price,” he says. Under the most optimistic scenario, which include the oil prospects and the LNG facility, Barclay’s valuation is NIS 2.27 per share – 441% above the current share price
Kaplan says that Israel current offshore discoveries at Mari-B, Tamar, and Leviathan, are only the first in the Levant basin. While it is clear that there will be disappointing drills, he believes that current best estimate of 25 trillion cubic feet of natural gas “is still the tip of the iceberg,” citing a 2010 US Geological Survey report, which estimates 122 trillion cubic feet of gas and 1.6 billion barrels of oil in the Levant basin.
Kaplan says that Ratio, with $100 million in cash and no debt, is properly capitalized for its 2011-12 capital expenditure plan, which includes bringing in a marine operator for its Gal license (south of Leviathan), and the upcoming Leviathan 3 exploratory well and the resumption of the Leviathan 1 well to oil targets in deeper strata.
Amount of natural gas and economic implications of discovery at Mediterranean Sea site yet to be determined.
A deeper layer of natural gas has been discovered at the Tamar field, off the coast of Haifa, according to a report published on Thursday by Delek Drilling and Avner Oil Exploration.
The impact of the newly discovered reserve has not yet been analyzed nor released in full. The significance of the newly discovered structure will depend on the amount of natural gas at Tamar and on the estimations of additional layers in other areas of the Mediterranean Sea that have not yet been discovered.
The new reserve, ‘Layer D’, was discovered beneath ‘Tamar 3′, and is said to be up to 25 meters wide.
According to the report, Noble Energy – the American partner leading the consortium – is gathering data on Layer D and analyzing the implications of the extent of the reserves at Tamar. It is currently not possible to determine the size and economic implications of the newly discovered reserve.
Noble owns 36% of Tamar, while Isramco Negev owns 28.75% and Delek Group, controlled by Yitzhak Tshuva, has a 31% percent stake through two units with equal shares of 15.6% each, Avner Oil Exploration and Delek Drilling.
The Tamar site is the largest natural gas discovery in Israel and plans on selling natural gas to Israel in 2013.
The Lebanese proposal of its maritime border with Israel that is currently under dispute does not include the Tamar and Leviathan gas prospects.
The Myra and Sarah leases have a best estimate of 6.5 trillion feet of natural gas with a 54% chance of geological success, but the range between the high and low estimates are quite large.
Modiin Energy owns 19.3% of Myra and Sarah, ILDC Energy and its affiliates own 48.4%, drilling operator GeoGlobal Resources Inc. (AMEX: GGR) owns 5% through its Indian unit, Israel Petroleum Company Inc. (IPC) owns 13.1%, and Blue Water Oil and Water Exploration Ltd. owns 8.8%.
Modiin Energy’s share price fell 2.1% in morning trading today to NIS 0.046, giving a market cap of NIS 902 million, but ILDC Energy’s share price rose 2.4% to NIS 1.13, giving a market cap of NIS 932 million.
Published by Globes [online], Israel business news - www.globes-online.com – on July 24, 2011
Are abundant natural resources a blessing, or a curse? This is the sort of question that economic theorists love to play with, usually concluding that, depending on other factors, they can be either or both. Israel, thus far burdened with a crippling dependency on imported oil and gas, has had astonishing success in developing its human resources—so much so that it has flourished economically even in the current global recession. Would it have done even better with adequate sources of domestic energy? Or worse? A formerly theoretical dilemma is poised to become a pressingly practical one.
Trillions of cubic feet of natural gas have been discovered in several titanic fields off Israel’s coastline. They promise both an abundance of domestic energy, as much as 200 years’ worth by some estimates, and the possibility of the country’s becoming a major energy exporter. The total value of the gas is currently worth close to a half-trillion dollars. On the macro level, and from the point of view of ensuring the country’s national security, the prospective boon is almost unimaginably beneficial. The question, as always, is what is entailed in realizing it, and how to mitigate any attendant social and political costs.
Begin with the issue of where to locate a gas terminal. Israel’s coastline is 170 miles long, the site of several cities and numerous competing uses, including ports, water-desalinization and sewage-treatment plants, military operations, and recreation. Thanks in part to ecological changes in the Nile delta (themselves the long-term effects of the Aswan high dam built in the early 1960s), the coastline is also being eroded and becoming more vulnerable to storm damage. Millions of Israelis, Jews and Arabs, vie for access to the few parks and undeveloped beaches on the seafront.
One pressing issue is strategic. Gas-receiving terminals include the infrastructure to process raw natural gas and remove contaminants, as well as storage tanks and links to distribution systems. They may also include facilities to create liquefied gas for transportation and storage by radically reducing its volume. Such facilities have the explosive potential of small nuclear weapons. In Israel’s case, any such facility will also automatically become a major target for adversaries ranging from Hamas to Iran. Already the single pipeline carrying natural gas from Egypt to Israel and Jordan has been repeatedly attacked since the fall of the Mubarak regime, and the electrical-power stations at the two coastal towns of Hadera and Ashkelon have been targeted by, respectively, Hizballah and Hamas rockets.
If the strategic implications of locating a gas terminal are significant, the domestic aspects are almost equally problematic. One plan would have placed the terminal at Dor, just south of the Hadera power station, effectively cutting through a beachfront kibbutz, nature reserve, and major archaeological site. Another proposal would expand the existing gas terminal at Ashdod, which serves a smaller offshore field. In both cases, those affected would be among the less powerful sectors of Israeli society, kibbutzniks and residents of outlying cities. (For both strategic and domestic reasons, there is no chance the terminal will be located anywhere near north Tel Aviv or its affluent suburbs.) And in both cases the sites have already been targeted by rockets.
More recently a proposal has emerged to locate a floating liquefied natural-gas terminal a few miles off the shore of Hadera, in what would amount to a giant ship that could temporarily move out of range of missile and other security threats. Australia is building a similar facility 120 miles off its western coastline, at a cost of $10 billion. In Israel, the state will of course remain responsible for its citizens’ security, but the size of the price tag inevitably raises the vexing question of who will pay for the infrastructure, and who will enjoy the proceeds.
The Israeli and American companies that have invested hundreds of millions for exploration stand to reap a windfall of billions. In January, the Israeli cabinet overwhelmingly approved taxing oil and gas profits at between 50 and 62 percent, effectively doubling the tax rate under which exploration had been launched. The new rates are in line with those in most Western countries, but the change prompted a complaint from the U.S. State Department about the deleterious retroactive effect on American investors. For their part, some Knesset members have been railing angrily about “greedy tycoons.” Prime Minister Benjamin Netanyahu has promised that the state’s share will be allocated toward education and security, but these debates can only become more heated, and more polarized, as time goes on.
No less fraught are the regional and international implications. Israel’s gas discoveries have prompted negotiations with Cyprus regarding the delineation of the two countries’ maritime borders and exclusion zones. Some entrepreneurs are talking about an undersea pipeline heading toward Europe. And, as has been well reported, there have been threats from Lebanon, which has already accused Israel of stealing “its” offshore natural gas.
Just south of the national park at the imposing ruins of Roman and Byzantine Caesarea, including the remains of the ancient aqueducts that supplied much-needed fresh water, and of the modern town of Caesarea that is home to some of Israel’s elite citizens, lies the Hadera power station. Its smokestacks dominate the horizon; a jetty protrudes offshore to carry coal from cargo ships.
The view from Caesarea beach thus already offers a juxtaposition of old—very old—with new infrastructure, as well as of the conflicts and divides that characterize Israeli society internally and its relations with its neighbors without. One can only hope that, with agility and political wisdom, the Jewish state will successfully navigate its course between the blessing and the curse of immense amounts of fuel, and the forms of power that come with it.
Alex Joffe is a research scholar with the Institute for Jewish and Community Research.