Langotsky Suing For His Share

January 22, 2010 by · Leave a Comment 

Yossi

Last month we reported on Yossi Langotsky, “Israel’s Unlucky Oil Man”. Yossi has been part of Israel’s search for oil for fifty years. He played an integral role in last year’s natural gas discovery off the coast of Haifa; so much so that the two gas fields were named after his  daughter ‘Dalit’ and his granddaughter ‘Tamar’. But Yossi wasn’t a part of the planned profits from his discovery. The reason is that his financial partner, Benny Steinmetz, pulled the plug on their involvement two months before drilling began.

Now Yossi wants what he believes is his. Israeli newspaper Haaretz reported today:

“Geologist Joseph Langotsky is on a crusade to reclaim his rights in the Tamar and Dalit gas field exploration, which he himself initiated.

Langotsky will shortly be suing his former partner, mining tycoon Benny Steinmetz, over the loss of his rights to the Tamar and Dalit fields, where large reserves of natural gas were discovered last year. The fields are named for Langotsky’s daughter, Dalit, and granddaughter, Tamar.

Langotsky and Steinmetz had been the owners of a limited partnership, STX, which had a 5% stake in the exploration rights. But Steinmetz dropped out of the exploration partnership two months before drilling began and Langotsky, who was unable to find an investor to replace him in time, lost his rights.

Langotsky is believed to be seeking compensation equal to 1% of the project’s value – $60 million, based on the project’s assessed value of $6 billion.” (read more …)

Yossi Langotsky, Israel’s Unlucky Oil Man

December 11, 2009 by · 6 Comments 

On November 30 the Wall Street Journal printed the story of Yossi Langotsky, an Israeli who has been searching for oil in the Promised Land for fifty years. The WSJ story focuses on Yossi’s involvement in Israel’s recent off-shore gas discovery and how he was left behind in its reward.

I met Yossi almost five years ago and learned about his role in the search for Israel’s oil. It was early April, 2005; Elaine and I had been invited to the Zion Oil & Gas  ‘Ma’anit #1′ spudding (beginning drilling operations) ceremony; the company’s first oil well drilling project in Northern Israel. Before the ceremony we were introduced to Mr. Langotsky, and then aside, we learned the unfortunate story of Yossi’s relationship to the Ma’anit #1.  The hole in which Zion Oil was to begin drilling in the spring of 2005 was, at that time, already 7,661 feet deep. This spudding ceremony wasn’t the first for the Ma’anit #1; in 1995 and Yossi headed the first drilling of the Ma’anit #1, but at 7,661 feet the project had run out of money and the hole was abandoned. Zion Oil & Gas reopened the Ma’anit #1 in 2005, drilled to 15,500 feet and then abandoned the well due to mechanical problems. Earlier this year, Zion re-opened the Ma’anit #1, now dubbed the ‘Ma’anit-Rehoboth #2′ and drilled directionally to a total depth of 17,913 feet.

Today seven zones of the Ma’anit-Rehoboth #2 are being tested for hydrocarbon (oil and gas) potential.  According to Zion CEO Richard Rinberg, in his October 30 newsletter, “With regard to our log analysis, an independent log analyst noted that the Ma’anit-Rehoboth #2 well does have a specified amount of potential ‘net pay’.” Although he was quick to warn readers, “You will appreciate that, until such time as we recover hydrocarbons at the surface (or not), we are not able to give any estimates of what (if anything) we believe we may recover.”

At this point,  whether or not the Ma’anit-Rehoboth #2 becomes a productive well, no one knows. Whatever happens, Yossi Langotski, the man who chose the location and drilled the first 7,661 feet, once again, will have his share of the bragging rights but not the profits. Below is the WSJ story.

For One Man, Israel’s Big Gas Find Is Bittersweet Victory

Wall Street Journal

By CHARLES LEVINSON

HERZLIYA, Israel — Two natural-gas fields in Israel’s Mediterranean waters were found in January to contain enough resources to meet Israel’s energy needs for 20 years — a huge find after more than half a century of lackluster carbon exploration here.

But for Yossi Langotsky, who for 10 years has been the driving force behind the project, the gusher was a bittersweet victory. He has been drilling holes in the Promised Land for nearly four decades, in a mostly futile search for energy. A month before drilling started on what would become the largest find in Israeli history, his financial backer pulled out. That forced him to relinquish his stake — today valued at an estimated $350 million.

“After 60 years of no success in oil exploration here in Israel, a miracle took place, and I lost out 30 days before it happened,” says Mr. Langotsky, 75 years old.

The pivotal role played by Mr. Langotsky in the historic discovery is undisputed. The two fields are named for his daughter, Dalit, and granddaughter, Tamar.

The fields, which won’t start producing gas until 2014, are relatively modest by Mideast standards. But they have already triggered a frenzy in the country’s quiet energy industry.

Yossi Langotsky was forced to relinquish his stake in a natural-gas project shortly before drilling started on the largest find in Israeli history.

Photo by: Debbie Hill for the Wall Street JournalYossi Langotsky was forced to relinquish his stake in a natural-gas project shortly before drilling started on the largest find in Israeli history.

Since January, Israeli oil companies’ stocks have soared, some rising as much as tenfold. In 2009, oil companies have invested between five and 10 times as much in Israel exploration as at any point in the country’s history, says Yaakov Mimron, head of Israel’s Petroleum Commission.

In recent weeks, two international companies, including Houston-based Noble Energy Inc., which led the team that made the gas find in January, separately began extensive and costly 3D seismic surveys of more offshore prospects. A Noble spokesman said they expect to drill new wells next year.

In the past 60 years, oil companies have drilled about 450 wells, but choked out just 20 million barrels of oil, less than Saudi Arabia churns out in three days.

Israel’s dearth of oil in a region awash in it became a national joke. “My closest friends laughed at me,” says Mr. Langotsky.

Many Israeli oil geologists quit the profession. Many of those who stayed are a touch unconventional by industry standards. The two exploration companies currently drilling for oil onshore in Israel are both run by pious prospectors, one an Orthodox Israeli Jew and the other a born-again evangelical Christian from Texas. They both use a combination of biblical prophecy and sound geological data to decide where to drill.

Mr. Langotsky began his oil career as a graduate student in the late 1950s, studying oil prospects along the Dead Sea. He left the profession when he was called on to serve in the army. He played a prominent role commanding an elite reconnaissance unit that helped capture Jerusalem from the Jordanians in the 1967 war.

After leaving the army in 1979, Mr. Langotsky returned to the oil business. For most of the next two decades he roamed Israel, drilling as many as 60 wells.

In the 1990s, Mr. Langotsky and a handful of others began looking offshore. Israel’s fortunes started to turn with a series of moderate-size gas finds in waters off the coast of southern Israel and Gaza.

It was then that Mr. Langotsky first turned his attention to a vast tract of territory deep underwater in the Mediterranean Sea, farther offshore than others were looking.

He pitched the prospect to about 100 top international oil firms, he says. They all turned him down, except for Britain’s BG Group PLC, which agreed to form a partnership with Israeli companies to study the site. The site was set to drill in 2002, but then the project snagged.

Drilling costs in such deep waters nearly 60 miles offshore would likely reach hundreds of millions of dollars, and the partner firms started squabbling about who would shoulder what percentage of the risk. There were also technical problems. Many international oil companies were wary of working in Israel, for fear of alienating oil-rich Arab governments.

Companies started dropping out, including, in 2005, BG itself. The company said the project wasn’t one of its drilling priorities at the time. Eleven different companies were in and out of the project at various times in the nine years it took to start drilling.

At last, in 2007, Noble, a midsize Texan oil company, agreed to buy a 35% stake and take over operations.

Since the project’s conception in 1999, Mr. Langotsky remained its public face. He convinced new firms and investors to join whenever one dropped out, and lobbied the Israeli government.

“If Yossi had not been there, then things would be looking quite different today,” says Charlie Druckman, Israel’s petroleum commissioner until 2004.

Early in the project, BG offered Mr. Langotsky the chance to buy a 5% stake. Unable to finance the stake himself, he brought in Israeli billionaire diamond and real-estate magnate Benny Steinmetz, who agreed in 1999 to buy the stake and give Mr. Langotsky one-fifth of his share, Mr. Langotsky said.

But in the summer of 2008, amid the global financial crisis, another infusion of cash was needed to start drilling, and Mr. Steinmetz balked, according to Mr. Langotsky. He said he would no longer invest in the project, relinquishing his 5% stake — including the share pledged to Mr. Langotsky, according to Mr. Langotsky. Other investors in the project took over the stake.

Mr. Langotsky still had the option to buy a 5% stake, but couldn’t find an investor to back him. Soon after, Noble announced the big find at Tamar, followed by the smaller Dalit field — finds amounting to nearly 1.2 billion barrels of oil equivalent. Mr. Langotsky was left with nothing but bragging rights.

Mr. Langotsky has captured some sympathy from industry colleagues and in the Israeli media. In the Israeli media’s portrayal of the situation, Mr. Steinmetz has been vilified. In September, Israel’s leading economic newspaper named him most in need of forgiveness for Yom Kippur, the Jewish day of atonement, for leaving Mr. Langotsky in the cold.

Supporters of Mr. Steinmetz say it didn’t make sense to continue with a risky, capital-intensive oil venture at a time of global economic uncertainty.

Mr. Langotsky remains defiantly upbeat. The son of early Zionist pioneers who valued duty to country over self, he insists his passionate search for oil was never about the money. “I’m very proud; I feel great,” he says. “I am totally disappointed that I failed to keep my rights, but this discovery is one of the greatest achievements of my life.”

Write to Charles Levinson at charles.levinson@wsj.com

Does Israel Have Oil? Wrong Question.

September 10, 2008 by · 2 Comments 

Does Israel really have oil? That seems to be the question everyone’s asking. Maybe it’s the wrong question. Turn’s out, Exxon and Shell have known about Israel’s oil for nearly ten years. Here’s a clipping from The Jerusalem Post, March 5, 1999. I’ll copy the text here since the clipping is a little hard to read (click on the clipping for a cleaner version).

ISRAEL IS OIL-RICH, EXPLORATION-POOR

Sir-

As a geologist and managing director of various oil exploration companies in Israel over the past 20 years, I was quoted in several paragraphs of Michael Arnold’s article “Slippery dreams” (January 22). I would like to amend and add certain facts as follows:

The oil potential of Israel was evaluated twice at the request of the Israeli government. In 1962, Lewis Weeks, the former chief geologist at Exxon, determined that “the potential ultimate oil resources of Israel should be of the order of 500 to 2,000 million barrels from primary recovery… The figures do not include gas… which may equal 50% and upwards of that of the oil.”

In 1979, James Wilson, former chief geologist or Shell (US) determined that on-shore Israel (the off-shore and the Dead Sea Rift Valley were not included) has a potential of330 to 2,000 million barrels of recoverable oil.

Both these experts have been president of the American Association of Petroleum Geologists.

Since the Wilson evaluation in 1979, extensive data have been accumulated relating to on-shore and off-shore Israel. From this data, it becomes clear that the total may exceed 2,000 million barrels.

Israel’s per annum consumption amounts to about 70 million barrels.

The 1962 evaluation predicted that “the finding and recovery of this oil and gas may require many decades” -and evidently assumed that such efforts would be made. Unfortunately, this has not been the case.

It is most likely that this failing is one of the main reasons why the forecast potential has not yet been discovered.

YOSSI LANGOTSKY

Herzliya

 2,000 million barrels? That’s 2 billion barrels. That’s Exxon and Shell saying it. So the question isn’t “does Israel have any oil?” The question is, “If the big boys have known about this for so long, why haven’t they done anything about it?” The answer, unfortunately, is pretty easy. They’ve got larger, established assets in the Arab world and the Arab world has told them, “If you do business with Israel, don’t bother doing business here.” That’s what the 1973 oil embargo was all about.

What’s Israel’s answer? Keep supporting those who are exploring for the oil they know is there. What can we do about it? Stop wondering if Israel really has any oil. It does. If you want to see it come to the surface, support the exploration already in country. This piece of history will come about, and it won’t be long until it does. Those involved in that effort are destined to be written in to the story of Israel’s future.