Monday, June 12, 2017

Gas cos lose appeal against Hanna license expiry - GLOBES

12 Jun, 2017 18:40
Nati Yefet

Minister of Energy Yuval Steinitz severely criticized Noble Energy, Delek Group, and Ratio.

Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz has rejected the appeal by Noble Energy, Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) on the decision by Director of Natural Resources Administration & Petroleum Commissioner Yossi Wurzburger against extending the companies' oil and gas exploration license for the Hanna [block]. Wurzburger's decision came after the companies found only 2-3 BCM of natural gas in the Dolphin drilling, an amount insufficient to make the prospect commercially valuable.

The gas companies obtained the exploration license in late 2008. Under the Israel Petroleum Law, the license cannot be extended beyond seven years unless a commercial discovery has been announced. The company submitted a request for recognition of the Dolphin reservoir as a discovery in February 2014, but were unable to prove that the developing the reservoir was worthwhile.

Last July, Wurzburger rejected the companies' request and announced that the license had expired. The companies appealed to the minister, who wrote in his decision that the attempt to appeal against the Wurzburger's judgment was unacceptable to him. "From the petition, it can be concluded that the commissioner should act like a calculator into which numerical data are fed, after which he puts out a mechanical answer," Steinitz wrote.

Steinitz added that the attempts to prove that developing the reservoir would be economically worthwhile under certain conditions made the discussion absurd, and in effect rendered the wording of the Petroleum Law, which states that the economic feasibility is to be carried out in real time in the years after the license is granted, superfluous. He summed up by saying, "I have decided to completely reject the appeal."

At the end of his remarks, Steinitz added, "It would have been proper in this case to impose heavy costs on the appellants for the state, but I was informed that in the current law does not allow me to take this measure."

Published by Globes [online], Israel Business News - on June 12, 2017 © Copyright of Globes Publisher Itonut (1983) Ltd. 2017