Thursday, December 31, 2015

Petroceltic moves to restructure Mediterranean footprint | Forbes


December 31, 2015, Christopher Coats

The sustained decline of global oil prices is forcing one company to reassess their position in the Eastern Mediterranean, despite strong potential in neighboring projects.

According to media reports, Petroceltic has initiated a “strategic review” of its operations and assets to address looming debt payments in the New Year.

Specifically, this includes efforts in Egypt and Greece in hopes of dealing with the more than $200 million in debt it currently faces.

For the company’s presence in Egypt, this means the sale of its interests in the North Thekah, North Port Fouad and the onshore South Idku licenses to joint partner Edison International.

According to a company statement, the “transaction remains subject to the receipt of Government approvals and the waiver of pre-emption rights held by the Egyptian Natural Gas Holding Company (“EGAS”) and is expected to complete in the first quarter of 2016. The sale of these interests will reduce Petroceltic’s exploration expenditure obligations in 2016 by approximately US$20 million. Petroceltic expects to record a loss of approximately $1.5 million on this transaction and the proceeds of the sale will be applied to repayment of debt.”

The exit comes at a time when Egypt’s natural gas fortunes appear to be improving after several years of declining output and mounting debt. Earlier this year, Italy’s Eni announced the discovery of a “super giant” offshore well that some have argued could reshape the region’s energy landscape.

According to a Bloomberg report on the discovery, Eni outlined a potential “super giant” field that could potentially be home to 30 trillion cubic feet of gas, making it the biggest find in the Mediterranean. The discovery was initially thought to provide significant momentum to regional energy development, especially among those operating in Egypt.

However, that push may have come too late for Petroceltic as the company looks for lucrative means to exiting the country to address its debt obligations.

For the company’s efforts in Greece, this means taking leave from its interest in the Patraikos license in the Gulf of Patra.

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The Saipem 10000 drillship arrives at Zohr-2 well location | Energy Egypt


December 31, 2015 - The giant drilling vessel Saipem 10000 arrived at the site of Zohr-2 well to start drilling operations, announced Eng. Tarek El-Molla, Minister of Petroleum and Mineral Resources. Eng. El-Molla made his announcement as he chaired Petrobel’s General Assembly Meeting.

The Saipem 10000 is a 5th generation ultra deepwater drillship, designed and built by Samsung Heavy Industries in 2000. The vessel has recently departed San Giorgio del Porto shipyard in Genoa after maintenance work.

Eng. El-Molla noted that a new company named Petroshorouk is currently under establishment for the development of the Zohr field, speeding up the development phase and for production from the first wells to start by the end of 2017.

(Source: Ministry of Petroleum)

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Israel's Gas Field to receive Iron Dome protection in 'Barak 8' | Arutz Sheva 7 - Israel National News

Following series of successful tests, Israeli offshore gas interests to receive advanced missile defense system to protect for all threats

By Raphael Poch, 12/31/2015


Test of Barak 8 Missile systemPhto Credit: IDF Spokesperson's Unit
Head of the Israel Aerospace Industries (IAI) told Israeli press Wednesday that the newly developed ‘Barak 8’ system which will be installed on Israeli naval ships will be able to protect Israel’s offshore gas assets.

Following the successful tests of the new system in India, Yossi Weiss, CEO of the IAI, said that part of the mission of the project is to protect the Israeli offshore gas assets.

“Technology is giving us the answer to the unfolding developments and threats of our enemies,” he said in an interview with Walla! News.

Weiss added that the system will also be used for “other naval assets." Weiss said the system is capable of providing an answer for a wide range of naval threats, including ‘sea-to-sea’ missiles and torpedoes, air to sea missiles, and land to sea missiles. The system itself uses advanced radar technology which is far superior to previous systems.

The system also has a land based derivative which has been sold to the Indian Air Force. According to current plans between the two nations, that system will soon undergo testing as well.

Vice President for Missiles, Systems and Space Group of the IAI, Boaz Levy, also spoke about the missile tests yesterday and said that “both an Israeli as well as an Indian ship have the systems currently installed.”

While the decision remains with the IDF as to when and how to install further systems, Levy added that the system could be fully operational on Israeli Naval ships in a matter of months.

According to IAI standards, three successful tests are needed to certify a new program. The two trials which occurred in India in the past week, have completed the trial run phase for the ‘Barak 8’ system, and have classified it as ready for deployment.  

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Φυσικό αέριο: Επανέρχεται το σχέδιο υπόγειας αποθήκης στην Καβάλα | Euro2Day

Δημοσιεύθηκε: 31 Δεκεμβρίου 2015 - Μιχάλης Καϊταντζίδης 

Ενώ παραμένει η εκκρεμότητα ως προς την ιδιωτικοποίηση της υπόγειας αποθήκης φυσικού αερίου στην Καβάλα, το ΥΠΕΝ εξετάζει εκ νέου την προοπτική της ανάπτυξής της. Σύσταση ομάδας εργασίας που θα εξετάσει τις επιλογές.

Τη μετατροπή του εξαντλημένου κοιτάσματος φυσικού αερίου στον κόλπο της Καβάλας, σε υπόγεια αποθήκη φυσικού αερίου, (The Basics of Underground Natural Gas Storage, US EIA) επαναφέρει το υπουργείο Περιβάλλοντος και Ανάπτυξης. Το κοίτασμα αυτό συνεχίζει να ελέγχει η εταιρεία που εκμεταλλεύεται τα κοιτάσματα της περιοχής, Energean Oil and Gas, ενώ στο τέλος Νοεμβρίου, με υπουργική απόφαση, επεκτάθηκε για ακόμη δύο συν ένα χρόνια η άδεια εκμετάλλευσης που κατέχει η συγκεκριμένη εταιρεία.

Η προοπτική μετατροπής του κοιτάσματος σε υπόγεια αποθήκη έχει εξεταστεί τόσο από την ίδια την Energean, η οποία σύμφωνα με δηλώσεις στελεχών της διατηρεί το ενδιαφέρον, όσο και από το Ελληνικό Δημόσιο. Συγκεκριμένα, πριν λήξει η ισχύς της άδειας εκμετάλλευσης, αποφασίστηκε το συγκεκριμένο περιουσιακό στοιχείο να ενταχθεί στα προς αποκρατικοποίηση μέσω διεθνούς διαγωνισμού.

Ωστόσο η διαδικασία αυτή ποτέ δεν προχώρησε εκ μέρους του ΤΑΙΠΕΔ, παρά το ότι ενδιαφέρον είχε εκδηλωθεί από εταιρείες όπως η Edison αλλά και η Energean. Έτσι, λίγο πριν λήξει η ισχύς της άδειας που κατέχει η Energean, το δημόσιο επεξέτεινε την ισχύ της, αφού διαφορετικά θα έπρεπε το ίδιο να αναλάβει τη φύλαξη και συντήρηση της θαλάσσιας πλατφόρμας.



Η αναθέρμανση του ενδιαφέροντος του αρμόδιου υπουργείου (ΥΠΕΝ) εκδηλώθηκε με τη σύσταση Ομάδας Εργασίας, η οποία θα εξετάσει τις δυνατότητες αξιοποίησης του κοιτάσματος «Νότια Καβάλα», ως Υπόγειας Αποθήκης Φυσικού Αερίου, στο πλαίσιο του γενικότερου ενεργειακού σχεδιασμού της χώρας. Ειδικότερα, η Ομάδα Εργασίας θα εξετάσει τις σχετικές τεχνικές και οικονομικές παραμέτρους, σε συνδυασμό με το εθνικό και ευρωπαϊκό θεσμικό πλαίσιο για το φυσικό αέριο και τους όρους ασφάλειας εφοδιασμού στην περιοχή, ώστε να εξαχθούν ασφαλή συμπεράσματα ως προς τις δυνατότητες αξιοποίησης της υπόγειας αποθήκης.

Επικεφαλής της Ομάδας Εργασίας έχει τεθεί ο Γ.Γ. του υπουργείου Μιχάλης Βεροιόπουλος, ενώ μέλη της έχουν οριστεί: ο διευθύνων σύμβουλος του ΔΕΣΦΑ Κωνσταντίνος Ξιφαράς, η πρόεδρος και διευθύνουσα σύμβουλος της Εταιρείας Υδρογονανθράκων-ΕΔΕΥ, καθηγήτρια Σοφία Σταματάκη, η επικεφαλής της ομάδας φυσικού αερίου και πετρελαιοειδών της ΡΑΕ, Αγγελική Μουρτζίκου, η Αλίκη Σκλήρη, Γενική Διευθύντρια Ενέργειας του υπουργείου, ο Δημήτριος Δαμίγος, Αν. Καθηγητής ΕΜΠ, και ο Δημήτριος Μπαμπασίκας, Φυσικός-Γεωφυσικός, τ. στέλεχος των ΕΛΠΕ ΕΛΠΕ +3,09% και της ΔΕΠ-ΕΚΥ.

Ο προοπτικές

Πάντως, με δεδομένο ότι το συγκεκριμένο asset συνεχίζει να περιλαμβάνεται στα προς πώληση περιουσιακά στοιχεία του Δημοσίου από το ΤΑΙΠΕΔ και το γεγονός ότι η Energean ως λειτουργός των κοιτασμάτων της περιοχής υποχρεωτικά θα εμπλακεί σε όποια μορφή αξιοποίησης επιλεγεί τελικά για το κοίτασμα Νότια Καβάλα, η παρουσία εκπροσώπων των δύο φορέων (ΤΑΙΠΕΔ, Energean) στην Ομάδα Εργασίας εκτιμάται ότι θα βοηθούσε στην καλύτερη αξιολόγηση των προοπτικών που διανοίγονται για την υπόγεια αποθήκη.

Αναφορικά με τις προοπτικές της, στελέχη της ενεργειακής αγοράς υπογραμμίζουν ότι η σημασία της είναι μεγάλη για την αναβάθμιση της ενεργειακής ασφάλειας. Η μετατροπή του συγκεκριμένου κοιτάσματος σε αποθήκη θα προσφέρει στο εθνικό σύστημα αλλά και στις γειτονικές χώρες πρόσβαση σε περίπου 500 εκατομμύρια κυβικά μέτρα φυσικού αερίου, τα οποία θα αποθηκεύονται από τους χρήστες της αποθήκης, για να διατεθούν όταν το απαιτεί η ζήτηση και οι τιμές είναι ικανοποιητικές.

Αρχική μελέτη που είχε γίνει πριν από μερικά χρόνια, υπολόγιζε το ύψος της συνολικής επένδυσης σε περίπου 400 εκατομμύρια ευρώ. Από το ποσό αυτό μεγάλο μέρος αφορά στο κόστος ποσότητας περίπου 500 εκατομμυρίων κυβικών μέτρων αερίου, που θα παραμένουν ανενεργά στην αποθήκη. Δηλαδή από το περίπου ένα δισ. κυβικά που είναι η χωρητικότητα της αποθήκης, θα μπορεί να χρησιμοποιηθεί μόνο το μισό για εμπορικούς σκοπούς. Έτσι, με δεδομένο ότι οι τιμές φυσικού αερίου έχουν καταρρεύσει, εάν ξεκινούσε σήμερα η επένδυση, το κόστος θα ήταν πολύ μικρότερο, καθώς το απασχολούμενο κεφάλαιο στην ανενεργή ποσότητα φυσικού αερίου θα ήταν πολύ μικρότερο.

Σημειώνεται ότι για τους όρους λειτουργίας της υπόγειας αποθήκης, ο ΔΕΣΦΑ κατά το παρελθόν είχε εκφράσει την άποψη ότι αυτή θα πρέπει να αποτελεί συστατικό του Εθνικού Συστήματος Φυσικού Αερίου με απολύτως ρυθμιζόμενη λειτουργία, ασχέτως του ιδιοκτησιακού καθεστώτος και του ποιος είναι ο λειτουργός. Από την πλευρά της, η Energean επανειλημμένα έχει προτείνει την αξιοποίησή της από την ίδια, μέσω της μετατροπής της σημερινής άδειας εκμετάλλευσης σε άδεια αποθήκευσης φυσικού αερίου, κάτι που επιτρέπει η ισχύουσα νομοθεσία. Η μετατροπή της άδειας θα επέτρεπε την επένδυση από επιχειρηματικό σχήμα με τη συμμετοχή της, ενώ η εταιρεία ήταν (και είναι σύμφωνα με τις τοποθετήσεις στελεχών της) να συζητήσει τους όρους λειτουργίας της συγκεκριμένης υποδομής.

Τέλος, αξίζει να αναφερθεί ότι η προοπτική λειτουργίας του αγωγού ΤΑΡ το 2020 αναβαθμίζει τον ρόλο μιας υπόγειας αποθήκης φυσικού αερίου, όπως αυτή της Καβάλας, καθώς στη διαδρομή του αγωγού δεν υπάρχει σε λειτουργία άλλη αποθήκη. Στις δε γειτονικές με την Ελλάδα χώρες, η μόνη αποθήκη φυσικού αερίου σε λειτουργία είναι αυτή του Σίρεν στη Βουλγαρία, με περιορισμένες όμως δυνατότητες αποθήκευσης και παροχής αερίου στο σύστημα.
Μιχάλης Καϊταντζίδης, kamich@euro2day.gr

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Medserv seeks bond, equity funding expansion strategy | The Times of Malta


Thursday, December 31, 2015, 00:01 by Edward Rizzo

Medserv’s need for further funding was first disclosed to the market on October 8 when the company announced that it entered into a conditional share purchase agreement for the acquisition of the three METS companies for a total of $46 million. In this detailed announcement, providing information on METS and the terms of the proposed transaction, Medserv had clearly indicated that it aims to finance the acquisition through a mix of debt and equity financing.

The announcement did not provide details on the debt already within METS and how the $46 million will be split between an equity injection by existing or new shareholders and total debt funding. In the circular to shareholders, sent in anticipation of the extraordinary general meeting that took place on December 3, it was mentioned that the minimum amount of the additional equity would be of €15 million.

Finally on December 21, Medserv announced the terms of the rights issue and the bond issue after obtaining approval from the MFSA.

I will not go into the details of the bond and rights issues, the pricing of these issues or the merits behind the decision taken by the executive directors. Instead, my article is intended to shed light on Medserv’s ambitious growth strategy.

Shortly after the MFSA approval of the Dual Issue Prospectus, Medserv held an information meeting for financial intermediaries and chairman Anthony Diacono provided a detailed overview of the intended plans going forward.

Diacono started off the presentation by explaining the current services portfolio of Medserv. The core business to date has always been the support services provided to international oil and gas companies via the logistics bases. Currently, Medserv operates from its base in Malta supporting two International Oil Companies (IOCs) and other subcontractors; it provides support to ENI Cyprus via a three-year agreement (extendable for a further two years) from its base in Larnaca, Cyprus; and in 2015 it provided port facilities in Greece, mainly to assist a client in the safe anchorage of vessels.

Another service which was always provided to international oil and gas companies was the manufacture of drilling fluids which are required during exploration and/or production programmes. This ‘mud-mixing’ facility is available at the bases in Malta and Cyprus.

Recently, Medserv branched out into the provision of maintenance and engineering services. Over the past two years Medserv was awarded a number of contracts to provide maintenance services to platforms being used offshore Libya. Another contract awarded to Medserv some months ago via the Tripoli office will extend into 2016.

In 2014, Medserv also invested a sizeable sum into Malta’s largest solar farm as it installed 8,000 PV panels across its Malta base generating annual revenue of circa €520,000.

The long-term plan of Medserv is to increase its geographic presence, strengthen its portfolio of services and expand its customer base further with additional international oil and gas companies and subcontractors.

The strategy therefore continues to focus on strengthening the core business, i.e. the support services provided to international oil and gas companies via the logistics bases. Apart from the present facilties in Malta, Cyprus and Greece, Medserv is seeking expansion into other regions. During the meeting, the chairman confirmed that Medserv is currently seeking a strategic partner to set up a base in Egypt after it was approached by two major IOC’s ahead of some important tenders being issued. This coincides with the announcement made by ENI a few months ago that it discovered the “largest ever” natural gas field in the Mediterranean Sea offshore Egypt.

The ‘supergiant’ well (the Zohr field) is the largest gas discovery ever found in Egypt, as well as in the Mediterranean Sea, and could become one of the world’s largest natural gas finds. It was also reported in the international press that the Egyptian General Petroleum Corporation agreed with ENI to start producing from the Zohr gas field by 2017.

Earlier this year, Medserv had also mentioned the possibility of works in Portugal. The chairman stated that a tender was submitted and if it is awarded to Medserv, a temporary ‘pop-up’ base will be set up to assist the IOC in the exploration of one well. Although this may not be a sizeable contract at the outset, it could become more beneficial should the exploration prove successful.

A possible expansion of another support base, this time in the Caribbean, would be more sigfnicant in terms of geographic expansion. The chairman claimed in the recent meeting that a tender for the setting up of a logictics support base in Trinidad & Tobago had been submitted to support the large operation of BP involving several offshore platforms and drilling activities. Medserv is reportedly now also on the global list of approved logistics contractors of BP. This will also help to reduce Medserv’s current dependency on ENI given the significant work by this IOC in the Mediterranean. The prospectus also indicates that earlier this year Medserv made a proposal to the National Energy Corporation of Trinidad to provide and operate a mud plant and bulk silos/brine plant within one of their ports.

Meanwhile, the imminent acquisition of METS fits in perfectly with Medserv’s long-term plans since it helps in widening its geographic presence and achieves diversification in its service portfolio, given the focus on precision engineering. It also extends the client base given the various blue-chip clients utilising the services of METS.

Medserv also aims to explore a number of cross-selling opportunities via the METS acquisition. One of the main attractions of the acquisition is the ownership of the VAM licence in two of its locations allowing METS to provide pipe threading services. This is reportedly a very highly specialised offering and the licence is difficult to obtain given stringent criteria including expertise and volumes of pipes to be serviced. Following the acquisition of METS, Medserv are confident that they will be able to obtain such a licence also for the Malta base within 18 months. This will enable Medserv to introduce this service across the Mediterranean region thus opening a new line of business in a region where exploration and production activity in the oil and gas sector is expected to boom in the next couple of years.

Another cross-selling opportunity is the manufacture of drilling fluids, which is a core competence of Medserv and which is currently not provided by METS.

Additionally, via the METS acquisition, Medserv also intends to explore the possibility of providing services to the major IOCs seeking to work on new projects in Iran. Iran is the world’s fourth-largest holder of crude oil reserves and some very significant exploration/ production contracts (both onshore and offshore) will be available to the IOCs once economic sanctions are lifted in early 2016.

During the EGM held on December 3, which was convened to approve among other resolutions the METS acquisition, a number of shareholders present questioned the financial benefits expected from this imminent acquisition in the Middle East, especially given the business downturn experienced over the past two years. Unfortunately, no additional information on the current trading performance was provided in the Dual Issue Prospectus published last week.

In the coming months Medserv’s shareholders will be eagerly awaiting the publication of the company’s 2015 financial results to get to know the extent of the superior financial performance achieved compared to earlier forecasts for the year and more importantly the publication of the Financial Analysis Summary due by June 30, 2016 providing the financial projections of the Medserv Group for 2016. This should also include the initial contribution from METS. Moreover, shareholders will be expecting news on developments related to the company’s ambitious growth strategy as well as further updates with respect to possible strategic investors following the EGM held on October 12 which authorised the directors of Medserv to divulge confidential information to such investors.

Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the company/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent, and may also have other business relationships with the company/s. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.

© 2015 Rizzo, Farrugia & Co. (Stockbrokers)Ltd. All rights reserved.
Edward Rizzo is a director at Rizzo, Farrugia & Co. (Stockbrokers) Ltd.

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Analysis: The Flaws in Gas Pricing in Israel's Energy Market


December 31, 2015

Last month during a conference titled "Energy Forecasts 2016" held in Tel Aviv, Israel, a few officials from the ministries of Finance and Energy who lectured from the podium had a common complaint: Natural gas is not attractive anymore to Israeli industrial customers and introducing it to them and infusing it into the industry is getting harder because of the energy price environment.

The difficulties grew this year as the sharp drop in energy prices closed the gap between oil products' prices and the price of natural gas. In Israel natural gas prices are fixed in a contract, a de facto price control, while other energy products' prices are linked to global energy prices. As a result, the prices of diesel oil and fuel oil, used in industry, came down sharply this year. Though those prices are still higher than those of gas, the gap between gas and oil prices are now not attractive enough to convert factory systems from oil to natural gas, as the latter's advantage was reduced by tens of percent. On the other hand, the sharp drop in coal prices during 2015 caused the gap price between coal and gas to increase resulting in power generation from coal being 25% cheaper than production from natural gas. An official at Israel Electric Corp (IEC) estimated recently that, at the current energy price levels, only a sharp drop in the natural gas price, from $5.5 MMbtu to $4 MMbtu would equalise power generation costs.

Those problems, of decreasing price gaps between oil products and natural gas on the one hand and increasing price gaps between natural gas and coal on the other hand, are unique to the Israeli energy market: Their source and their only cause is the disconnect between the natural gas price in Israel from prices in the global energy markets. The reason for the disconnect is the contract signed between the natural gas monopoly and the IEC, its biggest customer, which set a basic price at about $5.5 MMbtu. One can describe it as a de facto price control, and as price control mechanisms always do, it distorts market forces and real prices. Therefore, when Israel's Energy Ministry this week ordered the increased use of natural gas in power generation, it also ordered in parallel an increase in electricity prices, in order to finance, or subsidise, the use of expensive gas, through the electricity bills.

As mentioned above, natural gas prices in Israel are not adapted to world energy prices but linked to the American Consumer Price Index (CPI), the American price index, plus 1% for the contract's first seven years; thereafter it turns to the CPI minus 1%. However by then the price is supposed to climb to $7.5 MMbtu.

Despite the high natural gas price, the government is interested in encouraging industry and transportation to transition to this energy material, which is needed in order to justify further development of Israel's natural gas assets. So what do governments do when they face a financial problem? What governments generally do under such circumstances: throw money at the issue and hope for the best.

As such, the Israeli government has decided to subsidise the conversion to natural gas for various sectors in the economy/ (It's important to note, no one has used the word "subsidise" or "subsidy"; better to use the word "grants", a much more modern and neutral term).

That became clear during the conference in Tel Aviv, when one government official presented the government plans for grants while another one presented the government plans for taxation. On the expenditure side, the treasury would grant NIS 750,000 ($193,300) for an average factory's conversion to gas, which costs NIS 2 million ($515,400). The government will also subsidise extensively the installation of natural gas refueling stations in order to encourage change from oil to natural gas in transportation. On the fiscal side the treasury plans to raise the taxes on diesel oil and fuel oil for transportation and industry and also to raise the tax on coal, which is used only for power generation. (The natural gas taxation might go up but one can be assured that it will be by less than coal.) At the end of the process, the gap between natural gas prices and oil prices and the gap between gas prices and coal prices would be restored to their previous levels as natural gas would become once more an attractive alternative.

However this ambitious program is not coming free. It will cost the public hundreds of millions of shekels that will be shown at the top line of the natural gas monopoly partners' financial reports.

The logical solution in the Israeli market was the imposition of price controls on natural gas that would reduce its price, rather than inflate it, as is the current situation, and by doing so saving the taxpayers hundreds of millions of dollars and encouraging the transition to gas-based industry and transportation in an efficient manner.

Ya'acov Zalel

SOURCE

Wednesday, December 30, 2015

Zohr discovery stimulated increased investments in gas prospecting in Mediterranean: Official | Daily News Egypt


Egypt to increase gas production to 5.3bn cubic feet after linking part of Shorouk’s production in 2017

A senior official at the Ministry of Petroleum said Eni’s recent gas discovery boosted Egypt’s ability to secure gas for the domestic market. The total production will increase to about 5.3bn cubic feet per day by 2017, when Zohr’s production begins.

The Zohr discovery stimulated foreign companies to increase investment in research and exploration for gas in the deep water of the Mediterranean Sea. The official expected more petroleum discoveries in the Mediterranean; a number of companies are currently conducting studies and will soon reveal their preliminary results.

The Egyptian General Petroleum Corporation (EGPC) agreed with Eni to begin production from the Zohr field in 2017, with quantities expected at over 1bn cubic feet of gas per day.

EGPC Chairman Mohamed El-Masry said the agreement includes increasing production to 2.7bn cubic feet of gas per day by 2019. EGPC held a meeting with Eni to negotiate the price for gas, which is linked to a price equation with a minimum price of $4 per million British Thermal Units (BTUs) and a maximum of $5.88 per million BTUs.

EGPC agreed with Eni to renegotiate the price of Zohr gas production in 2019. Eni was officially informed not to export any of the produced gas. “The agreement states that all the production will be provided to the domestic market,” El-Masry said. “Only in case of excess will exporting be allowed.”

Companies were expected to finalise seismic surveys after 18 months, but Eni’s Zohr discovery accelerated research and exploration.  The Italian Edison completed its seismic surveys for its concession area next to Zohr in December. “Edison is likely to find gas, since those layers are unbroken and will have much gas in them,” El-Masry said.

The Shorouk concession agreement between Eni and EGAS includes setting aside 40% of the value of gas discovered to repay the foreign partner’s investments in the project. The remaining 60% will be distributed between the government and Eni, at 65% and 35% respectively.

The 40% repayment value will be provided to the foreign partner after finalising its investments, according to the agreement between EGAS and Eni. Its investment in the project amounts to $7bn for the development of its concession area in the deep Mediterranean Sea waters over three years.

An Eni report revealed that the concession area’s information and seismic data include original reserves estimated at 30tr cubic feet of natural gas, equivalent to about 5.5bn barrels. It covers an area of up to 100 sqkm and will become the largest natural gas discovery in the Mediterranean Sea. It may one of the largest gas discoveries in the world.

The report said the new find was detected at depth of 1,450 metres and reached a depth of 4,131 through 2,000 feet of hydrocarbon limestone rocks from the Miocene Epoch.

Eni will continue drilling early next year. It will drill three wells at once to accelerate the procedure and exploit existing infrastructure. The development of the discovery is expected to take three years to contribute significantly to meeting the needs of the domestic consumption of natural gas.

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Subsea 7 bags West Nile Delta gig | OE Offshore Engineer


Melissa Sustaita, 30 December 2015 

Subsea 7 inked a contract estimated to be between US$50 million to $150 million with Burullus Gas Co. for the platform extension and tie-in on the first phase of BP's West Nile Delta development of the Taurus and Libra fields, offshore Egypt.

Subsea 7's Cairo office and Subsea 7's Global Projects Centre in London will immediately begin engineering and project management work on the project.


Fabrication of the deck extension and spools will be carried out at the Petrojet Maadia yard near Alexandria. Offshore work is scheduled to commence in 2H 2016 using Subsea 7's Rockwater 2 as the main hook-up and accommodation vessel with Seven Borealis performing the offshore lift of the platform extension and the heavy construction vessel, Seven Arctic, installing the umbilical, Subsea 7 said.

The $12 billion West Nile Delta project involves the development of 5 Tcf of gas resources and 55 MMbbl of condensates. Production from the project is expected to be around 1.2 Bcf/d, equivalent to about 25% of Egypt’s current gas production. All the produced gas will be fed into the country’s national gas grid. Production is expected to start in 2017.    

"This contract recognizes the value we bring to our clients through early engagement to engineer, design and deliver cost-effective solutions for complex field developments. We look forward to expanding our presence in Egypt and building a long, successful and collaborative relationship with Burullus," Oeyvind Mikaelsen, executive VP southern hemisphere and global projects said.

At the end of July, Subsea 7 won a contract worth about $500 million from BP for the development of the Taurus and Libra subsea fields offshore Alexandria, Egypt, in the first phase of Egypt's West Nile Delta.

Earlier this month, BP Egypt completed the acquisition of 22.75% in the North Alexandria Concession and 2.75% in the West Mediterranean Deep Water Concession from Hamburg-based DEA Deutsche Erdoel, which brought the company's working interest in both concessions of the West Nile Delta project to 82.75%. 

In mid-May, BP increased its interest in the West Nile Delta project in Egypt after partner DEA farmed down its stake, which left DEA holding 17.25% in North Alexandria and West Mediterranean Deepwater. DEA formerly held 40% in North Alexandria, and 20% in West Mediterranean Deepwater.

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Eni extends gas agreement in Cyprus | Forbes


DEC 30, 2015, Christopher Coats , CONTRIBUTOR

Full of confidence from a recent offshore discovery in the Eastern Mediterranean, Italy’s Eni has announced the extension of an exploration agreement with Cyprus, extending the company’s footprint in the region.

According to local media reports, the Cypriot energy minister announced that it will extend its agreement with Eni and its South Korean partner KOGAS to explore offshore potential for natural gas of the country’s southern coastline.

The extension would take the partnership into at least early 2018, with exploratory drilling expected to begin in 2017.

For Eni, the partnership expands the reach of the Italian energy firm in the region just months after announcing that they had discovered what it feels could be the largest in recent history. The “super giant” gas discovery holds an estimated 30 trillion cubic feet of gas, making it the biggest find in the Mediterranean and possibly transforming the entire energy landscape of the region.

For Eni, a find of that size was expected to help justify its efforts in the region, providing with significant potential revenues for both sale into the Egyptian market and the export market. The extension of the Cypriot agreement supports that possibility.

For Cyprus, the announcement reiterates the country’s efforts to establish itself as a production and transport leader in the region, further expanding its collaborations with foreign partners. Earlier this year, Cyprus announced that they had also extended an agreement with France’s Total.

Earlier this year, Eni also came out in support of Cyprus being viewed as a likely strategic energy hub and “conduit for future Egyptian natural gas supplies”, tying together the efforts of the company’s regional efforts.

“Eni believes in the significant synergies of joint development in the entire area of the eastern Mediterranean,” the company said in a statement, according to UPI. “This area could be of crucial strategic importance as a gas hub for the whole region and also makes an important contribution to European energy security.”

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Ambassador (Former) Bryza Speaks About the Strategic and Economic Interests of Israel and Turkey | Natural Gas Europe


December 30th, 2015
The warming relations between Israel and Turkey has yet to materialise into a comprehensive diplomatic normalisation agreement. That end may take some time more. Meanwhile businessmen, advisers, academics and others, are trying to figure out how natural gas diplomacy would evolve in the East Med and what effects it will have on regional geopolitics and natural gas supply to Turkey, the biggest customer in the region.

To shed some extra light on the changing situation, Natural Gas Europe talked to Matthew Bryza, a former American diplomat and a former American ambassador to Azerbaijan who is currently a board member at Turcas Petrol, one of Turkey's biggest energy companies. He also serves as a senior fellow at the Atlantic Council in Washington, DC.

Mr. Bryza has extensive Eastern European and Eurasian experience from more than 25 years' activity in these areas as an American diplomat. He served as an American diplomat in Poland and in Russia, later joined the United States National Security Council as director for Europe and Eurasia, and then became Deputy Assistant Secretary of State for Europe and Eurasian affairs. In that role, he was involved with American efforts to advance peaceful solutions to various violent clashes that resulted from the disintegration of the USSR in Eurasia. With such extensive experience, combined with his current job as a board member in Turcas, one of Turkey's prominent energy companies, Ambassador Bryza is well qualified in the political as well as commercial sides of the natural gas industry in the Eastern Mediterranean.

Natural Gas Europe presented Mr. Bryza with questions concerning political developments in the region as well as questions concerning the possibility of Israeli-Turkish gas deals.

NGE: What are the chances for reconciliation between Israel and Turkey following the latest attempts to thaw the relationship between the two countries?

Mr. Bryza: The chances of reconciliation between Israel and Turkey are good, because it is in the strategic and economic interests of both countries to restore basic diplomatic relations. Russia’s recent belligerence toward Turkey and other NATO allies were the immediate catalyst of Israel and Turkey turning back toward each other. Thus, the test for Turkey and Israel will come when Turkey-Russia relations become less tense. Despite his harsh rhetoric, President Putin [off Russia] appears to be stepping back after a Turkish F-16 shot down a Russian Su-24 inside Turkish airspace last month, as reflected in his new-found conciliatory attitude toward the international community with respect to Syria. So, the key question is whether Turkey will continue to seek reconciliation with Israel even when Russia calms down, and I believe the answer is yes.

NGE: How critical is gas supply from Israel to Turkey in light of its deteriorating relationships with Russia?

Mr. Bryza: Gas supply from Israel to Turkey is not critical in the short run, since there is no chance Russia will cut off gas flows to Turkey. Indeed, Turkey is Gazprom’s second largest market after Germany, and one for which there is growing competition, which concerns Gazprom. Over the next 4 to 6 years, on the other hand, Eastern Mediterranean gas can play an increasingly important role in Turkey’s effort to diversify its supplies of natural gas away from a very expensive Russian supplier.

NGE: What are the natural gas quantities Turkish companies will be willing to purchase from Israeli companies?   

Mr. Bryza: In the near-term, I believe Turkish companies will be willing to buy 8 to 10 bcm [billion cubic metres] of Eastern Mediterranean natural gas for consumption within Turkey.

NGE: How much of that gas will be re-exported to Europe?

Mr. Bryza: All of that 8 to 10 bcm would be consumed within Turkey, whose natural gas market will expand in coming years. Once Turkish demand is satisfied, additional volumes of Israeli, as well as Cypriot and perhaps Egyptian gas, could be exported to the EU via Turkey.

NGE: Who will do the re-export: Turkish companies or Israeli companies?

Mr. Bryza: The commercial structure of possible sales of Israeli gas to EU member states remains to be determined, and will likely depend on the pattern of commercial cooperation that Turkish and Israeli firms develop in the near-term in gas exports to Turkey.

NGE: Who are the expected European customers (for example, Greece, Bulgaria etc.)?

Mr. Bryza: Given the likelihood that transportation costs will be netted out of the gas sales price that Israeli producers would receive, it would be most commercially attractive for Israeli gas to target the closest possible EU markets, which would indeed be Greece and Bulgaria. On the other hand, swaps of natural gas could theoretically enable Israeli suppliers to reach more distant markets.

NGE: Who will fund the 450-km pipeline construction from Leviathan to Turkey?

Mr. Bryza: The 450-km pipeline from Leviathan would be financed from natural gas sales, as part of a commercial deal, most likely on the basis of project financing.

NGE: What is the natural gas expected price at the well head?

Mr. Bryza: It is not possible at this time to determine what the price of natural gas would be at the wellhead. That price will be the subject of commercial negotiations of a gas sales/purchase agreement and defined by a mutually agreed pricing formula. That formula will likely be related to prices at a European natural gas trading hub, but adjusted to localised prices from other suppliers to Turkey, namely, Russia, Azerbaijan, and Iran.

NGE: What are the expected transmission charges?

Mr. Bryza: It is also too early to determine the costs of transmission, as these will be determined by the costs of construction and operation of the sub-sea pipeline. Such figures will require a more detailed feasibility study, followed by detailed engineering. But, these costs must be low enough to make sales to Turkey commercially attractive to both the companies developing Leviathan and to Israel. Otherwise, the pipeline will never be built.

NGE: What amount will be needed to be invested in the 450-km pipeline and for what annual capacity?

Mr. Bryza: Perhaps two billion dollars would be required for a pipeline with an annual capacity of 8 to 10 bcm.  But, this is only preliminary and rough estimate.

NGE: Because of the low oil price, Noble Energy is currently in a difficult situation regarding funding. Is there any option for a Turkish company to become involved as shareholders in the Leviathan gas field?

Mr. Bryza: It would be inappropriate for me to comment on possible interests of any Turkish–or American, for that matter–company in buying into Leviathan’s upstream development. What I can say, however, is that if all the factors describe above come together and exports of Leviathan’s gas becomes commercially attractive, many energy companies, as well as private equity funds, will be interested in investing.

NGE: Israel and Cyprus have yet to reach a unitisation agreement. Do you see any hurdles that will make it hard to achieve?

Mr. Bryza: I don't see any particularly difficult obstacle to Israel and Cyprus reaching a unitisation agreement for the entire geological structure in which both the Leviathan and Aphrodite fields lie, provided both countries continue to show the good will toward each other that has been present over the past year or so. Having the same private companies, Delek and Noble, as lead investors and developers of both of these fields should help smooth the way, unless, of course, anti-trust concerns in Israel return to Israel's political agenda.  

NGE: Is the partition of Cyprus an obstacle to Turkish-Israeli gas deals? Do you envisage it being resolved anytime soon?

Mr. Bryza: Comprehensive settlement of the Cyprus Question, or at least a major political breakthrough in the negotiating process, is required for an Israel-Turkey gas pipeline to attract necessary financing, since no major bank or private equity fund is likely to press ahead with such a big project against the expressed will of an EU member state like Cyprus. I do believe a major breakthrough in Cyprus negotiations is possible during the first half of 2016. Many of the most contentious issues that obstructed progress while I served as the U.S. mediator of Cyprus talks a decade ago appear to be resolved. That said, several difficult issues remain, any of which could derail the negotiating process. 

NGE: In regards to supply contracts, there is a trend toward de-linking the natural gas price from Brent. Will that be applied also to the Israeli-Turkish contracts? You mentioned a European natural gas trading hub. How much is it influenced by Brent price and is it less influenced from the Brent price than Russian gas?

Mr. Bryza: The structure of Israeli-Turkey gas sales/purchase contracts will be determined by commercial negotiations. I would anticipate that the commercial parties developing the project in both countries will search for a market-based pricing system, which means one that is de-linked from the price of Brent crude, and which is based on pricing at one of northwest Europe's highly liquid trading hubs, but perhaps adjusted to local prices in Turkey, which currently are a blend of relatively expensive gas from Russia and Iran and relatively cheaper gas from Azerbaijan. Northwest Europe's gas trading hubs are not influenced by the Brent price, and are determined by the market forces of supply and demand that play out in the form of competition from a range of suppliers. Russia's Gazprom is one such supplier. And so is Norway's Statoil, as well as a wide range of other gas producers in the North Sea as well as from further afield in the form of LNG.

NGE: At the current oil and natural gas prices level how long will it take to repay the investment needed in the pipeline?

Mr. Bryza: It is impossible to offer such an estimate at this early stage, but suffice it to say that the project will not attract investors if the payback period is too long.

NGE: How many Turkish energy companies are candidates to import Israeli gas? Which are they? Are they all private or will BOTAS be involved?

Mr. Bryza: I would prefer not to comment on the interests of other Turkish companies.  What I can say is that Turcas has been working with several Turkish as well as European companies to form a consortium of buyers. BOTAS would of course be involved at some point, but perhaps at a later stage, after negotiations among private companies have defined the project's basic commercial and financial parameters.

Ya'acov Zalel

SOURCE

Tuesday, December 29, 2015

Five-justice Panel to Hear Challenge to Israel's Gas Plan | Haaretz



Avi Bar-Eli, Dec 29, 2015

An expanded panel of at least five justices will consider the petitions to the High Court of Justice challenging the legality of the government’s gas framework agreement, the court announced Tuesday.

The framework gives monopoly control of the country’s major offshore natural gas exploration sites, Tamar and Leviathan, to a consortium led by Houston-based Noble Energy and Israel’s Delek group, subject to certain limitations, in an effort to pave the way for their development.

The court’s initial hearing on the matter has been scheduled for February 3 before three justices, Elyakim Rubinstein, Uzi Vogelman and Noam Sohlberg.

As it stands now, the court has four separate petitions pending by three public policy groups as well as the Meretz party. A fifth petition is expected from the Zionist Union party as well. The Tamar exploration site is already in production, but development of the much larger Leviathan site has stalled amid the regulatory uncertainly pertaining to the project. (Avi Bar-Eli)

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Maridive to conduct offshore explorations in Mediterranean: Source | Daily News Egypt

The company will complete the $151m Petrofac project in the Emirates for ADMA-OPCO in the first quarter of 2016

Mohamed Ahmed - December 29, 2015


Egyptian company Maridive & Oil Services S.A.E. has developed a strategy that targets natural gas exploration in Egyptian territorial waters, including the Mediterranean, according to a company source, who requested anonymity.

This comes after the government halted several agreements with a number of international companies following the discovery of the largest nature gas field found in the Mediterranean.

The discovery is expected to pave the way for new discoveries that require increased investments in research and exploration.

The source said the second aspect of Maridive’s strategy is maintaining the operation levels of offshore units at between 80% and 85%, while monitoring customers’ requests on units built before the year 2000.

The sources pointed out that if the old units prove to be unbeneficial economically, they will be sold to reduce operational costs, to support the company’s strategy to rationalise costs.

The source further noted that Maridive will conclude the implementation of the $151m Petrofac project in the UAE for the Abu Dhabi Marine Operating Company (ADMA-OPCO) in the first quarter of 2016.

Moreover, Maridive began construction phase of one project for the Oil and Natural Gas Corporation in India last November. The project will be completed within the second quarter of next year, according to the source.

The company’s net profits declined during the first nine months of this year to $5.456m, compared to $11.06m during the same period of 2014. However, revenues recorded $288.2m this year versus $226.64m during the same period of 2014.

Meanwhile, costs amounted to 83% of revenues during the first nine months of 2015, compared to 80.5% during the corresponding period of last year.

Maridive’s net profit declined during the third quarter of 2015 to $131,000, compared to $5.06m during the same period last year.

The sources attributed this decline in the company’s profits to the increase of the funds allocated for operational risk, in addition to increased income taxes paid within the portfolio of subsidiaries.

The company’s revenues during this period were distributed over $102m from its offshore services sector, where the operation levels of the units built after the year 2000 reached about 80%, compared with 75% for units built prior to 2000.

Maridive’s offshore projects accounted for approximately $188.95m of its revenues during the first nine months of 2015, compared to $123.7m during the same period last year.

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Press Release - Update with Regards to Natural gas supply agreements from the Tamar project | Delek Group

Tel Aviv, Tuesday, December 29, 2015. Delek Group's gas subsidiaries announced that on December 28, 1015, the Antitrust Commissioner ("the Commissioner") made a decision regarding an exemption for the conditions in restrictive arrangements between the Tamar gas reservoir partnership and natural gas consumers, further to the application of the Tamar partners, according to which the Commissioner granted an exemption from a restrictive arrangement in accordance with Section 14 of the Antitrust Law, 1988, which applies to nine agreements for the supply of natural gas signed by the Partnerships in the Tamar project, listed in the decision (the main ones are the agreements with OPC Rotem Ltd., Dorad Energy Ltd., and Paz Ashdod Refinery Ltd.).[1] 

The terms set out in the Commissioner's decision are substantially similar to the terms set out in the preceding decisions, except that it prescribes that the announcement of the reduction of the purchase quantity will be permitted at any time during the period, which will end at the later of the following periods: (a) the period between January 1, 2020 and December 31, 2022 (in the previous decision, the period was between January 1, 2018 and December 31, 2020); or (b) the period starting at the beginning of the fifth year from the date of natural gas supply and ending at the end of the seventh year ("The Commissioner's New Decision").

The receipt of the Commissioner's New Decision fulfilled the precondition in the agreements related to the decision, which required the Commissioner's approval.

The Tamar partners will take steps to amend the purchase agreements with these consumers in accordance with the Commissioner's New Decision.

The Partnership believes that the Commissioner's New Decision is not expected to have a material effect on the Partnership's projected cash flow from the Tamar project.


For more information please see the immediate reports as published on TASE:
http://maya.tase.co.il/bursa/report.asp?report_cd=1011141

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Turkey sets date for tender of gas pipeline from Iraqi Kurdistan | Today's Zaman

December 29, 2015

The state-owned Turkish Pipeline Corporation (BOTAŞ) will open a tender on Feb. 9 for the construction of the Şırnak Natural Gas Pipeline, which will integrate the natural gas of northern Iraq into Turkey's gas grid, the company said on Monday.

According to BOTAŞ's statement, the tender will include the construction of a 180-kilometer pipeline which is expected to commence operation in 2018, carrying up to 20 billion cubic meters (bcm) of gas a year. The pipeline is planned to be connected to the national gas network through a valve at an existing pipeline in Mardin province. Northern Iraq reportedly has 5 trillion cubic meters of gas reserves.


Rattled by the fallout from the downing of a Russian jet, Turkey has geared up to diversify its gas suppliers in order to ensure its energy security. Even though Russia, its main supplier, has avoided imposing restrictions on gas exports to Turkey since then, the Turkish government has engaged in negotiations with its remaining suppliers in a bid to boost the volume of its current imports and to establish alternative sources with new partners.


Turkey currently imports 95 percent of its energy from abroad and fulfills 55 percent (27 bcm) of its annual natural gas requirements (50 bcm) and 30 percent of its oil needs with imports from Russia. Since Turkey downed a Russian warplane over an airspace violation in late November, both diplomatic and economic ties between the two countries have been strained.


An interruption in gas flow to Turkey also poses a risk to the electricity network as the country generates 48.1 percent of its electricity via natural gas, according to government data.


Meanwhile, Turkish media reported on Tuesday that the Energy Market Regulatory Agency (EPDK) will announce in its Thursday meeting a hike in electricity prices for households by between 5 to 10 percent, effective as of January. The last time the EPDK increased unit prices was on Oct. 1.


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as reported by Anadolu Agency

BOTAS to open Sirnak gas pipeline to tender in February
Sirnak natural gas 185 kilometer-long pipeline will transfer gas from KRG to Turkey, according to BOTAS

The Sirnak Natural Gas Pipeline that plans to carry gas from the Kurdish Regional Government (KRG) region to Turkey will be opened to tender on Feb. 9, 2016, according to the Petroleum Pipeline Corporation, BOTAS announcement on its website.

After Turkey’s shooting down of a Russian military jet last month, Turkey accelerated its efforts to diversify energy sources as a precaution for any possible gas cuts from Russia. 

As part of that process, the transfer of gas from the KRG region moved up on the agenda with Turkey's decision to advance the project. As a result, the pipeline will be opened to tender in February.

The pipeline will run its 185 kilometer length from Mardin in Turkey's southeast and will finish in Sirnak, on the Silopi border in Turkey's southeastern Anatolia region. It will be connected to the existing Mardin gas pipeline 35 kilometers from its originating point and is planned for connection to Turkey's national gas grid at the Serenli station in Mardin. The 40 inch diameter pipeline will be constructed in 720 days. 

Tony Hayward, head of Genel Energy, a company operating in the KRG, stated in a conference in November that the region has 5 trillion cubic meters of natural gas reserves - enough to meet Turkey's needs for 50 years. 

He also explained that the first flow from the region to Turkey may be delivered in two to three years’ time with a starting capacity of around 10 billion cubic meters. 

"This amount may increase to 20 billion cubic meters at the beginning of 2020," he added. 

By Nuran ErkulAnadolu Agency


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Netanyahu’s Support for the Gas Deal: A Leadership Crisis He Had to Win | Haaretz


The government ignored security arguments when negotiating with natural gas firms but dredged them up to bypass the antitrust chief. The following are three key issues.

Eytan Avriel Dec 29, 2015

Hats off to the organizations that have fought the government’s decision to give Delek Group and its U.S. partner Noble Energy a dominant position in the country’s natural gas industry.

And hats off to Israelis who keep fighting. Although Prime Minister Benjamin Netanyahu signed the deal, the debate is still going on, from High Court petitions to arguments in the press and on social media.


After all, the questions about what Israelis will reap from this miracle under the sea are only growing. Here are three.



The issue of the implementation team

Immediately after approving the deal, Energy Minister Yuval Steinitz appointed a team to implement it. The team includes, besides people from the Energy Ministry, officials from the Finance Ministry and National Economic Council, agencies that shaped the deal and led negotiations with the gas companies. They called the deal “the best option.”

The implementation-team idea is a good one. The public sector is bureaucratic and does not excel at carrying out decisions, so a team to keep things moving is a good idea. But this team, like the process that led to the deal, isn't up to snuff and is hard to understand.

First, the person appointed to head the team is the Energy Ministry’s director general, Shaul Meridor, who has never handled the gas issue because of possible conflicts of interest. His brother, Mattan Meridor, is a partner in the law firm representing the Noble-Delek gas monopoly.

Meridor, who specializes in antitrust and competition law, attended some of the talks between the monopoly and the government team that forged the compromise deal. Is it logical that a person blocked from crafting the deal because of possible conflicts of interest should head the team implementing it?

That’s just one problem. Israelis have learned about an obscure clause in the antitrust law, Article 52, via which Netanyahu as economy minister bypassed the antitrust commissioner’s decision urging more scrutiny. Netanyahu used the argument that the gas deal has significant political and security ramifications, not just economic.

The show this month at the Knesset Economic Affairs Committee has revolved around this issue. At the climax of the show, the prime minister told the committee that the state had invested hundreds of millions of shekels to provide security for the offshore gas platforms because they’re in range of Hamas rockets from Gaza and the gas affects our ties with Egypt, Greece, Cyprus and Turkey.

The prime minister declared that decisions on the gas market should take into account security and foreign relations. He appropriated the antitrust commissioner’s authority and signed the deal. So why didn’t the implementation team include representatives of the Defense Ministry, the Foreign Ministry, the National Security Council and the military, which has to defend the gas platforms?

And why didn’t the team include members of the Antitrust Authority and the Electricity Authority, agencies responsible for the economy? Put a slightly different way, why does it appear the only interest directing the government is the gas monopoly’s economic interest?

Meanwhile, there’s a worrisome question the High Court might raise when it hears the petitions against the deal. If security and diplomatic considerations are so important, whey didn’t defense and foreign ministry officials work on the deal and help negotiate with the gas companies?

If there’s a fear that defense or diplomatic considerations were neglected, is the deal prudent? For example, the public never received a report on the costs of defending the platforms, or on whether the authorities discussed with the gas companies who would pay for the platforms’ defense.


The issue of global gas prices

The government uses security arguments when it’s convenient. It ignores them when negotiating with gas companies but dredges them up to bypass the Antitrust Authority. Similarly, the government uses global gas prices or ignores them based on its political needs.

Last summer, every time Steinitz sought to convince his interlocutors about the gas deal’s low price, he showed a table he said proved that Israel’s gas price would be low relative to most developed countries. But Steinitz used 2014 prices, while the market had plummeted since then. Only under the pressure of public protest did the gas deal lower the ceiling on new contracts.

But global gas prices have continued to collapse; it’s now questionable whether developing the gas fields yet to be developed will be profitable – basically all the fields besides Tamar, from which gas has been flowing for two years. On Thursday, for example, the Energy Ministry awarded concession documents for the Karish and Tanin reserves, but given current prices it’s highly doubtful whether it’s worth developing these two small fields.

This is important because the gas deal is based on the principle that the Karish-Tanin reserves, which Delek and Noble are required to sell within 14 months, are the ones creating competition and price reductions in the Israeli market. If it’s not profitable to develop them, no competition will ever develop.

According to experts, as long as gas prices don’t recover, the government will be forced to offer billions of shekels in subsidies to the Karish-Tanin shareholders to make it worth their while. Otherwise the fields won’t be developed.

This subsidy can take the form of a huge development grant, a high enough long-term guaranteed price, or a combination of the two. Are these low prices in global markets, which create the need for an enormous subsidy to the concession holders, not enough to reopen the debate on the gas deal, or at least hold a public discussion?


The issue of Netanyahu’s resolve

Of course, the prime minister didn’t show any interest in the gas market until a year ago, just as he didn’t show any interest in key economic issues in recent years. It’s no coincidence.


This decade, Netanyahu has portrayed himself as a responsible adult on security and foreign policy, and left the irksome socioeconomic issues to ministers and bureaucrats.

Netanyahu may have met Noble Energy’s chiefs when they visited Israel, sometimes with Delek’s controlling shareholder, Yitzhak Tshuva, but he didn’t help with the work and contacts in drafting the deal.

But a year ago, when the antitrust commissioner decided to do his job, Netanyahu turned into the deal’s main marketer; he even took the unusual step of taking over from his economy minister. So why did Netanyahu suddenly return to economic affairs, and why in the complex field of gas?

According to one theory, he was pressured by the United States, and we know of at least one letter from casino magnate Sheldon Adelson, the owner of the Israel Hayom newspaper who supports Netanyahu unconditionally. Government insiders and lobbyists for former U.S. President Bill Clinton also applied pressure.

Another theory suggests that Netanyahu feared that postponing development of the gas fields would lead to an investigative committee on “the great gas disaster,” as his enemies would label it, blaming him. There are two theories on this.

One is that Netanyahu could speed up the deal and development, even to the benefit of the gas companies. Second, he could blame delays on his political opponents – leftists, communists and protesters, whose real goal is to dethrone him.

It’s very likely that neither of these theories is right and that Netanyahu simply found himself in a leadership crisis he felt he had to win. Politicians on the sidelines say Netanyahu’s involvement shifted after Steinitz, who enjoys a rare open door to the prime minister, entered the Energy Ministry.

Steinitz recruited Netanyahu to help market the deal. The prime minister was armed with slogans. He declared that “when I want something, I usually get it.” And from there he had no choice but to continue until the deal was approved.

Which version is correct? We have no answer, but the question still keeps many people busy.

Eytan Avriel, Haaretz Contributor


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