Last week, Israel’s chief geologist visited Houston based oil and gas explorer ATP’s Gulf of Mexico offshore drilling platform to see best offshore exploration practices for himself. Israel geologist Victor Bariudin made the trip to get an understanding of ATP’s safe and effective offshore drilling procedures and make a recommendation to his country’s Minister of National Infrastructures, Dr Uzi Landau. At the end of his drilling platform visit, Mr. Bariudin stated, “I will recommend to our minister and our staff that we use this method and to work with them.” ATP followed (also Houston based) Noble Energy into the exploration waters of offshore Israel and into the world’s largest natural gas discovery in more than a decade. Testing indicates that an offshore oil discovery isn’t far behind.
Israel’s expectation is that the recent gas discovery and the likely possibility of significant oil reserves will make the country energy independent and even an energy exporter. The economic impact of gas and oil production in Israel could be more profound to the nation’s GDP than any industry the country’s history.
Houston’s Fox affiliate captured Bariudin’s Gulf of Mexico drilling platform highlights in the video below.
Earlier this month Mr. Bariudin, Israeli Petroleum Commissioner, Dr. Michael Gardosh, and other Israeli officials visited with the managment of Zion Oil at Zion’s Caesarea, Israel offices. Zion holds the largest onshore exploration rights territory in Israel.
The Jerusalem Post reported this week on an assessment from the Swiss based financial services giant UBS, that a significant oil find could have a greater impact to Israel’s economy than the recent massive natural gas discoveries offshore.
UBS analysts, Roni Biron, Ziv Tal and Reinhard Cluse wrote in a report on the Israeli gas and oil sector that: “Our calculations suggest that, in the event of success, oil could potentially deliver a boost to GDP growth, the budget and the external balance that might potentially be even bigger than the impact from natural gas.
“This would also imply a larger appreciation potential for the shekel and an even greater requirement to manage the resulting macroeconomic challenges through a carefully managed sovereign-wealth fund.”
Simply put, UBS analysts are saying that discovering oil could mean more to Israel’s economy, trade balance, domestic budget, value of the shekel and long term national wealth than the recent gargantuan offshore natural gas finds that will make Israel both import independent and a major exporter. Not to mention (they didn’t) that being oil and gas independent would add significantly to Israel’s national security.
The UBS analysts reminded readers that the Leviathan and Tamar fields were the world’s largest gas discoveries in the past decade, that Tamar would be sufficient for all of Israel’s domestic needs, making Leviathan available for 100% export. They reported, “natural- gas exports from the Leviathan field will begin in 2017 at almost $3 billion per year, before rising to almost $6 billion in 2020.”
$6 billion per year from natural gas exports – that’s significant! What’s more significant is that the UBS report was about how a oil could have a greater impact.
Zion Oil & Gas Stock (ZN, NASDAQ) continues to rise since it’s six month low of $4.31 back in January. On March 2nd of this year Zion stock shot to $5.81 after broadcast media interviews and print news articles with Founder John Brown and CEO Richard Rinberg during the National Religious Broadcasters convention in Nashville.
Zion stock settled down under $5.00 during much of March and then began to climb in April, topping at $5.40 after April 14 news of Israel awarding Zion Oil & Gas the Jordan Valley exploration license. Zion stock on the last day of trading since this report finished at $5.37.
Trading analyst, SmarTrend, announced Thursday that their ’uptrend’ call has been “vindicated” by Zion’s recent stock performance.
So what does this mean to those of us who aren’t Wall Street day traders or stock analysts? I’m not sure – I’m not one of those guys. I own Zion Oil stock because I believe in what they’re doing and I believe in the nation of Israel. Zion’s vision is to find oil in Israel and provide for the nation’s domestic energy needs through that(those) discovery(ies).
What about the daily ups and downs of Zion’s stock? At this point, who cares? I figure that an oil company’s stock value isn’t really all that important until they’ve either discovered oil and/or gas, or they give up looking. Zion hasn’t made a discovery (yet) and they sure as heck haven’t shown any signs of giving up. Until one or the other happens, I’m all in.
*Reminder – the editor of www.OilinIsrael.net is not an investment consultant or a stockbroker (not even close). For investment advice see your financial counselor, or better yet – if you’re a believer in Israel’s G-d, seek His advice.
In a March 11, 2011 Jerusalem Post article Dore Gold, president of the Jerusalem Center for Public Affairs and former Israeli ambassador to the UN stated that Israel’s newly discovered fossil fuel reserves could ‘revolutionize the global energy sector’.
Dor stated in the article, “Libyan oil accounts for less than 2 percent of world oil production, yet the revolt against Muammar Gaddafi has managed to shoot up the price of oil to more than $100 per barrel in the last month.”
The article goes on to report that, at the same time Israel holds the world’s third largest oil shale deposits and, because Israel’s Tamar gas field is capable of supplying the country’s domestic natural gas fields for the next twenty years, 100% of the gas harvested from the Leviathan field (estimate at twice the volume as Tamar) could go to export markets.
What does this mean? As Middle East oil supply from Arab countries becomes more expensive and more politically contentious, Israel’s energy exports from existing and pending discoveries should be coming online.
Bottom line: Israel energy exports in the near future could very well change the political and economic landscape in the Middle East. With Arab political regimes falling apart at the seams and oil prices spiking with the evening news, the fact that the only stable democratic government in the region and America’s best friend (yes, it’s still true) in the Middle East may very soon be one of the world’s energy exporters is a comforting thought. Go Israel!
We (True Potential Media) traveled to Israel for a week of shooting video at Zion Oil’s office in Caesarea, their Ma’anit-Joseph #3 well site in Northern Israel, and in Jerusalem. Zion Founder John Brown, CEO Richard Rinberg, President and CEO Bill Ottaviani and Executive VP Victor Carrillo were on-site in Israel for interviews on the vision and progress of Zion Oil’s mission in Israel.
The video, photographs, and other content produced during the shoot will be compiled and presented over the next few weeks and months as Zion shares its story and its vision with the world: ” … to assist Israel in the restoration of the Land by finding and producing oil and gas – helping to make Israel politically and economically independent.”
Back in December I wrote “Egyptian Gas Deals Threaten Tamar Exploration” and a reader asked (I paraphrase), “What does Egypt have to do with oil and gas in Israel?”
As we’ve watched a revolution in Egypt unfold from our TV screens in the last two weeks, we now know the answer to our reader’s question … plenty!
Al Jazeera reported on Saturday. “Egypt gas pipeline attacked“. Israel gets about 40% of its natural gas from Egypt, from the Egypt gas pipeline. Fortunately, the terrorists blew up the side that supplies gas to Jordan rather than Israel. Unfortunately, Egypt shut down the gas pipeline to Jordan and Israel until they could quell the terrorist activity … which may be awhile. That means 40% of Israel’s natural gas requirement isn’t getting to Israel right now. According to a UPI report out today, that’s costing Israel $1.5 million per day in ‘alternate’ energy sources.
Al Jazeera reminded readers: “Israel is realising that their good friend (Mubarak) is on his way out, and they are not sure who is on the way in.”
Forbes’ Chris Barth asked the question in his Monday blog: “Will Egypt Protests Boost Israel’s Budding Energy Market?” Barth says:
“As protests in Egypt continue, investors are pondering the future of Israel’s energy supply, with one eye on Cairo and the other on Israeli energy companies. Although Israel has been quickly moving toward a more diverse energy structure, however, it still relies on Egypt for a full quarter of its energy needs, mainly natural gas delivered via the Arish-Ashkelon section of the Arab Gas Pipeline. Indeed, existing contracts with Egypt seem to prevent any large-scale shakeups in Israel’s energy imports, even in the face of recent domestic natural gas discoveries. Despite what has been a nerve-wracking month for energy-minded Israeli investors wary of instability, the state’s reliance on Egyptian gas doesn’t look to be going away any time soon.”
Israel’s gas supply from Egypt has been cut off by the unrest and terrorist bombings in Egypt. It’s long term gas supply from Egypt is jeopardy, depending on whatever form of government comes up on top after the revolution. No more gas from Egypt – that’s bad news for Israel, right?
Maybe not. In the short run it certainly hurts now; but in the long run, Israel, I believe, will be much better off.
Remember what I said in December’s article? “Egyptian gas deals threaten Tamar exploration.” The sweetheart gas deal Israel has had with Egypt for the last thirty years as a stipulation of the Camp David Peace Treaty (40% of Israel’s natural gas imports) means that actually producing the gas discovered inside Israel’s territory has been slowed or even threatened because Israel prefers cheap Egyptian gas to paying the price of getting Israeli gas to market. Why build Israeli infrastructure when we can get Egyptian gas for a few shekels less?
I’ll tell you why – sometimes ‘cheap’ isn’t so cheap. The Egyptian sweetheart gas deal won’t last forever – as far as we know, we could be witnessing its death on Cairo’s Tahrir Square right now. With not-so-friendly neighbors surrounding her and political turmoil rebooting the Israel ‘friendly’ Egyptian government, it’s a pretty good bet that the foreseeable future of ‘cheap’ Egyptian gas for Israel may be ticking down.
For Israel, energy isn’t just an economic issue it’s a national security issue. If Israel has a domestic energy source available she’d better start developing the infrastructure to bring it to market. Relying on the neighbors for natural gas doesn’t seem like such a good long term strategy anymore … even if it’s cheap.
Israel Approves Doubling of Taxes on Oil and Gas Extraction Profits
New York Times By ETHAN BRONNER
Published: January 23, 2011
- JERUSALEM — The Israeli government on Sunday approved a near doubling of the profit tax on gas and oil extracted from its territory, a move of considerable significance in the wake of recent offshore gas discoveries expected to be worth tens of billions of dollars.
The cabinet voted overwhelmingly to accept the recommendations of a government committee to tax energy profits between 52 and 62 percent and to set aside a special fund from the income aimed at a range of public needs.
“I intend to establish a fund for Israel’s future that will be devoted to education and security,” Prime Minister Benjamin Netanyahu said at the cabinet meeting. Parliamentary approval is considered a certainty, but debate will doubtless occur on the priorities of the new fund.
In the past few years, about 25 trillion cubic feet of natural gas have been discovered off Israel’s northern shore, enough to turn it from a vulnerable energy importer into a robust exporter. In recent weeks, exploration companies have announced a 20 percent likelihood of there being four billion barrels of oil under the gas, which could prove still more significant.
The companies, along with some conservative political forces, have fought hard against any increase in the profit tax, saying that the cost of exploration is so high that the rate will endanger the viability of the enterprise.
But Eytan Sheshinski, a Hebrew University economist who led the government committee that recommended the increase, said the new rate was slightly below the average of the Organization for Economic Cooperation and Development, a group of more than 30 countries that Israel recently joined.
“We often chide ourselves in Israel that our policy-making decisions lack real planning,” Mr. Sheshinski said in a telephone interview. “Yet here was a process in which the committee sat for nine months, taking testimony that added up to thousands of pages. This was a real process of which we can all be proud.”
Finance Minister Yuval Steinitz said after the cabinet vote, “Today the government will put an end to the disgrace in which the citizens of Israel do not benefit from the country’s natural resources, as do the citizens of other developed nations.”
In case anyone missed it last summer, oil has been discovered in Northern Israel. We’re not waiting for an oil discovery – it’s already happened! The oil has been/is being produced and sold. What’s more, the exploration company, Givot Olam, based its search for oil in Israel on Scripture. That’s right, oil has been discovered in Israel, based on Bible passages predicting the discovery and its location. The same Bible (Torah) passages used by my father, Jim Spillman, back in 1981 in his book, The Great Treasure Hunt. The same passages Zion Oil & Gas Founder John Brown heard Dad teach on a Zion Temple in Michigan thirty years ago and took to heart. Included Jacob’s Blessing, recorded in Genesis 49 and Deuteronomy 33, is the prophecy of a last days oil discovery. Jacob’s descendants will be blessed from the “deep that coucheth beneath”; “for the chief things of the ancient mountains, and for the precious things of the lasting hills, and for the precious things of the earth.” Issachar and Zebulun “shall suck of the abundance of the seas and of treasures hid in the sand.” Asher will “dip his foot in oil.”
The prophecy of oil in Israel isn’t going to be fulfilled someday – it is being fulfilled as we watch!
A January 13 Globes Article follows progress at Givot Olam’s Meged 5 well site; I’ll share a few excerpts here:
“Givot Olam Oil Exploration LP (TASE:GIVO.L), which is currently fracing (hydraulic fracturing) sections of its Meged 5 well and carrying out production tests, is seeking to cool investors’ enthusiasm after yesterday’s flare at the wellhead, which indicates the presence of fuel at the well. The scale of production, if any, is unknown, but the flare is a routine procedure during production tests.”
“A few months ago, Givot announced that production tests conducted during the summer produced an average of 382 barrels of oil a day. Fracing is now underway in sections 1-6 of the borehole to speed up the production rate, and production tests are underway of sections 7-8.”
“Givot sold 6,000 barrels of oil produced during last summer’s production tests to Oil Refineries Ltd. (TASE:ORL) at the below market price of $60 per barrel. It cannot be ruled out that oil currently being produced is also being sold to Oil Refineries, and is why there are oil tankers at the wellhead. However, how much oil is being sold is not known.”
“A capital market source close to the matter told “Globes”, “When you peel away all the conduct of the past year, Meged 5 ultimately has something real.”
Givot’s Meged 5 is just the beginning of onshore oil discoveries in Israel. I believe Givot will drill more and produce much more in their Meged oil field.
Zion Oil & Gas, just to the north of Givot Olam, controls 327,000 acres of exploration territory and is in the final stages of drilling their fourth well, the Ma’anit-Joseph #3. In just weeks, Zion will be at its final depth of 19,000 feet.
With Israel’s recent gas discovery, the country is now staged to be natural gas independent (natural gas now powers some of Israel’s power plants and by the end of the decade, most likely, all electrical generation will come from natural gas fired plants). Noble Energy, one of the exploration partners on the gas discovery says they believe substantial oil reserves are under the gas fields.
Israel now has enough natural gas to supply its needs into the foreseeable future and for export. With the ongoing operations of Givot Olam, Zion Oil & Gas, Noble Energy can oil independence for Israel be far behind? I don’t think so.
What do you think?
Leviathan will apparently be one of the largest natural gas discoveries in Israel.
After the tough times he has recently gone through, Ratio Oil Exploration (1992) LP (TASE:RATI.L) CEO Yigal Landau had a more gentle moment this morning. After an extended period of quiet, Landau issued a notice to the press in response the discovery of signs of gas at Leviathan, and it began with “We were not surprised by the positive indications.”
Landau, as is often the case, expressed in words what many others were thinking.
We have gotten used to gas discoveries. They are already fully priced in at the stock exchange, as in the financial press.
And still, it must not be forgotten that Leviathan will apparently be one of the largest natural gas discoveries in Israel, and in its giant belly about $80 billion worth of gas has accumulated. This astronomical sum would have evaporated in an instant if a second scenario would have occurred last night, and signs of gas were not discovered. The chances of that were even, and throughout the dramatic night last night the negative scenario seemed the more likely, until almost the last minute.
Beyond that, it is important to remember the potential for a large oil discovery at Leviathan, even if the chances six to one against. A discovery like that would have far-reaching economic, strategic, and geo-political consequences for Israel and the entire region.
Published by Globes [online], Israel business news – www.globes-online.com – on November 29, 2010
Iranian Ambassador to Lebanon says Teheran to conduct a 3D seismic survey to map possible oil and natural gas-bearing structures.
The Iranian Labor News Agency quoted Roknabadi as saying, “Lebanon has [an] oil field shared with Israel. Threequarters of this field belongs to Lebanon and a quarter of the field belongs to the occupying regime [Israel],” “This country is about to exploit oil soon, but the Lebanese have not done anything in the field yet,” he added.
“Even when we expressed readiness to help the Lebanese in this field, the parliament of [Israel] voiced objection and said that Iran should not do this. But Lebanese officials have much welcomed our participation in oil exploration in this country.”
Lebanon has a delineation agreement with Cyprus. It hopes to start offshore gas and oil exploration in its waters by early 2012.