Israel: Energy & Natural Resources The Israeli Energy Minister Announces Israel's 2nd Offshore Bid Round

Last Updated: 8 January 2019
Article by Herzog Fox & Neeman

On November 5, 2018, the Israeli Energy Minister announced the launching of the second bid round for exploration licences for natural gas and oil in Israel's economic waters in the Eastern Mediterranean.
 
The bid round details will be published in the upcoming weeks on the Israeli Energy Ministry's website.
 
Submission of bids is by June 2019 with announcement of the winners expected in July 2019.
 
The following preliminary information is already available on the Israeli Energy Ministry's website:
 
Zoning of Blocks:
 
In the new bid round, licences for 19 blocks will be issued in five zones.  Each block measures up to 400 sq km and each zone, consisting of multiple blocks, can be as large as 1600 sq km. The decision to market the blocks in zones is to allow better correlation between the exploration areas and subsurface geological structures that potentially contain oil and gas reservoirs.
 
The zones are located in the central and southern parts of Israel's economic waters, an area which has already been partially explored.

Participant Guarantees:

The basic participation guarantee amount for the first block licensed in a zone will be $2.5 million (US). Every additional block in the same zone will require another $0.5 million (US) guarantee. The maximum guarantee required to receive four consecutive blocks (zone) will be $4 million (US). In addition, before drilling, the licencee will be required to place an additional guarantee, in the sum of $5 million (US).

Licence Period:

An exploration licence will be granted for an initial period of 3 years. During this period, the licencees will implement the work plan - essentially assessing the whole area granted in the licence. After completing the work plan, the licencee can request a licence extension of two years, provided that that they submit a work plan that includes drilling in at least one of the licences in the zone. They will also need to submit an additional work plan that will be approved by the petroleum commissioner.

After drilling and completing all the work plans, the licence term will be able to be extended by two additional years, to a maximum of seven years, subject to a commitment to drill in each licence, which was granted by the end of the licence term.  

Competition Consideration:

To encourage participation of as many new bidders as possible in this bid round, the Israeli Energy Ministry has decided to limit the number of licences granted to any one party to 8 licences. In addition, it has been decided that any licencee holding over 20% of a producing petroleum lease - will not be able to participate in the current bid round. In addition, a group that does not hold current licences will be preferred in the current bid round in order to increase diversity of licence-holders.

Environmental Principles:

Licences will only be granted in areas approximately four miles or greater from the shoreline. While granting exploration licences and approving surveys, drilling and infrastructure, the Ministry of Energy will inform the licencees of various environmental requirements. 

Fees and payments:

Companies who are interested in participating in the bid round and submitting proposals will be requested to register and purchase a data package to include geological and geophysical data from drilling and 2D and 3D seismic surveys. The data package will be available for purchase on the Israeli Energy Ministry's website.
 
Status of gas fields discovered offshore Israel can be found here
 
Please feel free to contact us if you have any questions or need any assistance regarding the above.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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