Leviathan Gas Reservoir Partners Seek Increase in Export Permit - Raising Concerns
Posted on Jul 17, 2023 by Ifi Reporter
The partners of the Leviathan gas reservoir have recently submitted a request to the Israeli Ministry of Energy to increase their export permit by 180 BCM (billion cubic meters). If approved, this request would allow for an increase in future exports from the reservoir, resulting in substantial revenue gains for the companies involved, including New Med Energy, which is controlled by Yitzhak Tshuva.
Currently, Israel's gas reserves are permitted to export approximately half of the natural gas they contain, but any increase beyond existing contracts requires special permits. It is important to note that even if the request is approved, it will not exceed the export threshold established by the Zemach committee in 2012.
However, granting an expanded export permit to the Leviathan reservoir could potentially diminish the state's bargaining power in future negotiations with the gas corporations. This is because exported natural gas often fetches significantly higher prices compared to the local market. Allowing increased exports could weaken the state's position and leverage during future discussions with the partners in the reservoir.
The Leviathan reservoir, with a capacity of 600 BCM, is the largest of the offshore reservoirs located off the coast of Israel. Its ownership is divided between New Med Energy (45%), Chevron (40%), and Ratio (15%). The Ministry of Energy and Infrastructure has confirmed that they will not be addressing the request at this time.
In a related development, the fourth procedure for granting natural gas exploration licenses off the Israeli coast recently concluded its proposal submission phase. Six proposals for gas exploration were submitted, vying for four exploration areas. Nine companies participated in the bidding process, including five new companies in Israel. Some of these energy companies joined forces to submit joint bids, forming four distinct groups. As per the procedure's terms, new companies have an advantage over existing competitors when it comes to obtaining exploration licenses. Notably, there is significant interest from large oil companies seeking to enter the Israeli energy market.
The outcome of both the request to increase the export permit for the Leviathan reservoir and the allocation of exploration licenses will significantly impact the energy landscape in Israel, as well as the country's future negotiations with gas corporations.
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