The Ministry of Energy and Infrastructure Announces Results for Two Zones in the 4th Offshore Bid Round

Minister of Energy and Infrastructure, MK Israel Katz: "Dramatic news for the Israeli energy market. Even now, major natural gas exploration companies put their trust in Israel's robustness and want to invest here. The winning companies have committed to unprecedented investment in natural gas exploration over the next three years, which would hopefully result in the discovery of new natural gas reservoirs. That in turn will solidify Israel's energy security, enhance the country's international relations, contribute to reduction in the cost of living, and form a secure backup energy source in order to accelerate the transition to renewable energies. I would like to thank the staff of the Ministry's Natural Resources Administration for their hard and diligent work, in this time when many employees have been called up, to keep pushing the Israeli energy market towards a cleaner and more secure future."

The Petroleum Commissioner at the Ministry of Energy and Infrastructure announces the results of two Zones within the 4th Offshore Bid Round (OBR4) for Natural Gas Exploration in Israel's Exclusive Economic Zone (EEZ), in accordance with the prescribed schedule, and having received the recommendation of the Petroleum Council with regard to two Zones.

The announcement is made following an in-depth examination of the bidding companies’ compliance with the professional and financial qualifications defined in relevant legislation and the Call for Bids, including on environmental issues, and the scoring of the bids on professional and economic criteria. The results were presented before the Petroleum Council which recommended their approval by the Petroleum Commissioner.

The Ministry is now able to announce the following winning bids:

Zone G - 6 licenses awarded to:

• Eni (operator)
• Dana Petroleum
• Ratio Energies

Zone I - 6 licenses awarded to:

• SOCAR (operator)
• BP
• NewMed Energy

The results of the two Zones constitute a great achievement for the Israeli energy market, including the following:

• The introduction of four new companies to natural gas exploration in the Israeli EEZ.
• The introduction of two new operators to Israel. Insofar as additional natural gas reservoirs are discovered, this will enhance the diversity of supply and stimulate competition in the domestic market.
• A total of over $15 million in signing bonuses.

Director of the Natural Resources Administration and Petroleum Commissioner, Chen Bar-Yoseph: "The results of OBR4 as published today are the fruit of the professional and wide-ranging efforts by our team over the past year, constituting a ground-breaking achievement. We are confident that the winning companies will conduct the exploration phase in a professional manner, in order to maximize the energy and economic potential of the reservoirs for the benefit of the citizens of Israel. We are launching a new phase in securing Israel's future energy needs, and we are confident that by combining existing and emerging technologies, we will be able to produce this energy while maximizing revenues for the people of Israel and minimizing the environmental impact. I would like to thank the Minister of Energy and Infrastructure for trusting us in leading the process and creating a better energetic and economic future for the citizens of this country."

Background

Within the fourth bid round, four groups of exploration licenses (zones) were offered. The decision to market the zones in groups of licenses is meant to allow for a better fit between exploration zones and geological structures that might contain natural resources. The bid round is the latest in a series of bid rounds for natural gas exploration which began about eight years ago, with the previous bid rounds resulting in 18 licenses being awarded and four exploration drills conducted.

In accordance with the rules of the bid round, exploration licenses will be awarded for an initial period of three years. During this period, the license holders will execute the work programme they committed to in their bid, in order to assess the potential for the discovery of natural gas in the awarded acreage. Following this period, the license holders may request an extension of the license for an additional two years, subject to an updated work programme approved by the Petroleum Commissioner and a commitment to drill within at least one of the licences.

After conducting at least one drilling and complying with all elements of work programme, the licenses in the group may be extended by a further two years, up to the maximum of seven years allowed in the Petroleum Law. This extension will be possible on the condition that a commitment is submitted to drill in each of the licenses not yet drilled by the end of the license period. The basis for the decision on the license period (3+2+2 years) is to enable the license holder to thoroughly study the area and only then to decide whether to continue the activity therein.