An Israeli exploration group said on Sunday it would return its licences to develop a natural gas field off Israel’s Mediterranean coast to the government, citing a number of factors including a lack of investors.
Returning the licence to all rights to develop the Daniel gas fields could be a significant blow to Israel, which is seeking to become energy-independent and an exporter while developing competition in its existing gas sector.
A group led by Isramco Negev and Modiin Energy last year said a resource report showed there could be an estimated total of 8.9 trillion cubic feet (tcf) of natural gas at the Daniel East and West fields.
It said on Sunday its decision to give up its rights was based, among other things, “on assessments regarding the level of geological risk in the licences, the difficulties expected in commercialising the gas, if and when it is discovered, and the lack of interest by new investors.”
It added in a statement to the Tel Aviv Stock Exchange that the licences expire in April 2018 – seven years after they were granted – and may not be extended. At the same time, the group does not have the resources to raise its portion.
Isramco holds 65 percent of the licences while Modiin owns 15 percent. Isramco also has a stake in a nearby gas field of similar size called Tamar.
The government has been under pressure from regulators, lawmakers and the public to open the sector to competition. Up to now the sector has been dominated by a partnership of Noble Energy and Delek Group <DLEKG,TA>, which controls both Tamar and the much larger Leviathan fields.
Energy Minister Yuval Steinitz has said experts estimate there are between 10,000 billion and 15,000 billion cubic metres (bcm) of gas in the eastern Mediterranean basin that includes Israel, Egypt and Cyprus – enough to supply domestic needs as well as Europe.