Threats of War over Oil in the Mediterranean

Israel has plans to enlarge its navy as the potential of a Mediterranean war with Lebanon looms over oil.  According to an October 18 UPI report, Israel is considering adding Israeli built warships to protect the Leviathan and Tamar offshore oil and gas fields. Israel’s navy is already scheduled to receive three new German made Dolphin class submarines.

According to the UPI report, “Neighboring Lebanon, which is technically at war with Israel, claims that Leviathan, the largest field yet found, runs into its territorial waters. Israel rejects that claim. The Iranian-backed Hezbollah has threatened military action to prevent Lebanese energy reserved being ‘looted.’”

In the south, Israel also must protect its current offshore gas platforms near Gaza from potential Hamas attack.

Both Hezbollah and Hamas are reported to have acquired anti-ship missiles from Iran that could be used against Israel’s offshore drilling platforms. Additionally, terrorist groups could simply sail explosive laden boats up to the platforms and detonate their cargo.

Lebanon’s news agency, The Daily Star, reported today that, “Lebanon is gearing up for a long-term oil and gas production program although the looming diplomatic crisis with Israel over each country’s share of undersea fossil fuels threatens full-scale conflict …”

Lebanon, still technically at war with Israel, disputes the current Israeli Lebanese maritime border and claims that thousands of square kilometers of Israel’s Tamar and Leviathan gas fields are within Lebanon’s maritime ‘Exclusive Economic Zone.’ The terrorist organization Hezbollah, now an official member of Lebanon’s government and backed by Syria and Iran has vowed that it will not let Israel take possession of the offshore oil and gas fields. Hezollah leader, Seyyed Hassan Nasrallah , stated earlier this year, “Those who put a hand on the Lebanese territories that have oil assets will have their territories harmed in return.”

Israel ‘deploys drones’ over offshore gas fields

AFP August 9, 2011

JERUSALEM — Israel has deployed drones to keep watch on gas fields off its northern coast, fearing attack by the Hezbollah militia from neighbouring Lebanon, the Jerusalem Post daily reported on Tuesday.

The fields lie in a part of the Mediterranean that is claimed by Israel for gas exploration and production, but Lebanon says the fields lie within its territorial waters.

“The decision to deploy drones was made in order to maintain a 24-hour presence over the site,” the paper said, adding that the air force was equipped with the locally made Heron drone, which has special electro-optics designed for maritime work.

The Israeli military would not confirm or deny the Post report to AFP.

The paper said that the air force started aerial surveillance after a warning last month from Hezbollah, which in 2006 fought a deadly war with the Jewish state in which it used anti-ship missiles.

“The Israeli enemy cannot drill a single metre in these waters to search for gas and oil if the zone is disputed… No company can carry out prospecting work in waters whose sovereignty is contested,” the Shiite group said.

The Hezbollah threat came after Israel’s cabinet approved a map of the country’s proposed maritime borders with Lebanon and submitted it to the United Nations, which has been asked to mediate in the dispute.

The map conflicts with one submitted by Lebanon to the UN last year, which gives Israel less territory.

The two countries are technically at war and will not negotiate face to face.

The disputed zone consists of about 854 square kilometres (330 square miles).

The two biggest known offshore fields, Tamar and Leviathan, lie respectively about 80 kilometres (50 miles) and 130 kilometres (81 miles) off Israel’s northern city of Haifa.

Tamar is believed to hold at least 8.4 trillion cubic feet of gas (238 billion cubic metres), while Leviathan is believed to have reserves of 16 trillion cubic feet (450 billion cubic metres).

In June an Israeli company announced the discovery of two new natural gas fields, Sarah and Mira, around 70 kilometres (45 miles) off the city of Hadera further south.

Offshore Gas Field is a ‘Monster’

Noble Energy chairman and CEO Charles Davidson expressed optimism that there will be more gas fields discovered at a press conference in Tel Aviv today.

He said, “We conducted a 3D seismic survey, which will provide very sophisticated information enabling us to know whether there are more reservoirs. We believe that there are other reserves adjacent to the Tamar and Dalit reservoirs. We’re now analyzing the results of the seismic survey. I hope that we’ll continue to find natural gas in this country. I’m optimistic about more reservoirs, whether at Leviathan or elsewhere.”

Davidson added, “Israel was the land of milk and honey in Biblical times, but in the modern era, its milk and honey and natural gas. In Israel’s deep waters, in virgin territory, a monster natural gas discovery has been made.”

Noble Energy Inc. (NYSE: NBL) is a partner in the Tamar and Dalit offshore gas fields, together with Delek Group Ltd. (TASE: DLEKG) subsidiaries Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) subsidiary Dor Alon Energy Exploration Ltd. It is also a partner with Delek Group in the Yam Tethys partnership, which owns a natural gas field offshore from Ashkelon, and in the Leviathan prospect, west of Tamar, with Delek Group Ratio Oil Exploration (1992) LP (TASE:RATI.L).

Noble Energy convened the press conference at the Tel Aviv Hilton not only to wax poetic about biblical Israel, but to outline its program to develop its natural gas reserves in Israel. Investors are eager for any scrap of information about the Leviathan lease, where 3D seismic survey is underway, whose results are due later this month. If gas is found, the prospect’s partners will begin drilling toward the end of the year, at an estimated cost of $100 million.

Davidson said, “The company expects to drill into another large structure during the second half of the year, and to drill in the two discoveries already made during 2011.”

The statement reiterates what Noble Energy said in the conference call following the publication of its financial report for 2009 last month, without explicitly mentioning “Leviathan”. “As for Tamar, the immediate challenge is to reach an agreement with the government on how to bring the gas to shore, since seafront real estate in Israel is very expensive. One possibility is to build a new terminal, another is to use Yam Tethys’ existing infrastructure,” Davidson said.

Davidson promised that the company would meet its timetable for the Tamar well. The well’s partners are due to publish their development plan for the reservoir in the second half of the year. The plan will reportedly cost more than $2.6 billion, with gas production beginning in early 2012.

“We’ve been here for over ten years already,” said Davidson. “Noble Energy won’t be here for years, but for decades. I can’t imagine a better place to be than here.”

Noble Energy will invest $140 million in gas exploration in Israel in 2010, almost 10% of its budget.

Shares of Israeli gas and oil exploration partnerships on the Tel Aviv Stock Exchange (TASE) have skyrocketed by hundreds and even thousands of percent in the past year, as investors seek the next Isramco. Davidson, however, sends a clear message to investors: Be careful. “Oil and gas exploration shares were hyped last year, and I urge caution,” he said. “There is no sure thing in the energy industry, and in the end, only a few companies will succeed. There’s an upside potential in the shares of Noble Energy. I’m a long-distance runner, and I don’t comment about the market’s response over the next week or two. We’re managing projects that will last us decades. In this business, you don’t plan for days, but for the long haul.”

Published by Globes [online], Israel business news – www.globes-online.com