Israel Pushes Back Licence Round Date Again

Israel's energy ministry announced June 22 the "extension of the competitive procedure for opening the sea to new natural gas and oil exploration until November 15." It is the second time in two months that the ministry has postponed the deadline for submitting proposals.

The reason was to allow new energy companies to invest in Israel, in parallel with other tenders marketed by various countries in the Mediterranean Sea.

Israel initiated the current licensing round at the end of last year for 24 offshore blocks and said that results will be published by July 2017. Following yesterday's announcement, it apparently failed to attract major and medium size energy companies, so the extension is a face-saving measure for the energy minister, Yuval Steinitz, and his overall policy for the development of the Israeli energy industry.

The current extension, by four months, is double the first extension, which was by two months, and indicates the difficulty in bringing major and medium size oil companies to Israel, while those companies are involved in exploration activities in the eastern Mediterranean in Cyprus, Lebanon, and Eygpt.

During the last year, the ninistry spent a lot of time, energy, and money promoting the licensing round. Steinitz travelled the world, hosting roadshows in London, Singapore, and Houston in efforts to attract significant investors. However, so far the only two candidates who purchased the licensing round documents are French-owned Edison, based in Italy; and Energean, the Greek E&P company, which is already involved in the Israeli natural gas industry.

The efforts, the ministry said in its statement, included "inquiries to relevant companies, assistance and answers to company questions, explanations of the complex regulatory process in Israel, and dealing with a sensitive geopolitical situation in which some companies are afraid to promote their investments in the State of Israel."

Two of the natural candidates to take part in the licensing round, Delek Group and Noble Energy, are prevented from doing so because they are deemed to hold too big a position in Israel's natural gas market.

Ya'acov Zalel