Israel Oil and Gas Report Q1 2013

Business Monitor International, January 2013, Pages: 75

BMI View:

The long-term outlook for Israel's energy sector is increasingly positive, as some of the country's major gas discoveries move closer to development. However, Israel must cope with an increasingly adverse political climate, with short-term threats posing challenges to the country's energy security. This remains particularly true now Egyptian gas exports have been taken offline following the cancellation of a twenty-year-old gas supply agreement.

We highlight the following trends and developments in Israel's oil & gas sector:

- Bolstered by the discoveries of significant natural gas reserves at the Tamar and Leviathan offshore fields, Israel is primed to emerge as an exporter of gas over the course of BMI's forecast period to 2021. The development of the domestic gas industry is increasingly important to the country's energy security following Egypt's cancellation of its twenty-year-old gas supply contract, which has cut off critical gas supplies to both Israel and Jordan.

- Although Israeli gas consumption declined slightly in 2011, from 3.69bn cubic metres (bcm) in 2010 to an estimated 3.32bcm, owing largely to attacks on the gas import pipeline from Egypt,
gas consumption is forecast to have rebounded in 2012 and will rise to 5.01bcm in 2013. This is largely on the back of attempts to diversify and end a reliance on Egypt for gas. Indeed, the finalisation of Israel's first floating liquefied natural gas (FLNG) import terminal, with first shipments anticipated in December 2012, is an important step towards meeting the country's short-term natural gas supply needs. Over the long term, the country's growth as a gas exporter will raise the economy's dependency on natural gas, pushing forecast consumption to 13.48bcm by 2021.

- Gas production should reach just over 20bcm by 2021, assuming the Leviathan field comes onstream by 2017. Due to the significant potential at Leviathan and other fields, including (but not limited to) the Marine field and the Shimshon reservoir, there are also strong upside risks to this forecast. However, in order to successfully develop the Marine field considerable political risks must be overcome as the field is located offshore Gaza. The Israeli government and the Palestinian Authority entered into negotiations over the development of the field in September 2012, although significant challenges, including disagreements over revenue sharing, endure.

- While gas production is set to rocket, oil also holds considerable potential, both in the form of deep offshore reservoirs and a pilot scheme for oil shale, which could potentially unlock several billion barrels of reserves.

- Israeli oil consumption is set to decline substantially, from a high of around 244,000 barrels per day (b/d) in 2013 to under 210,000b/d by the end of the forecast period in 2021. We do not expect a rise in Israel's 220,000b/d refining capacity over the forecast period.

BMI Industry View 5

SWOT Analysis 6

Israel Oil and Gas SWOT 6

Industry Forecast Scenario 7

Oil And Gas Reserves 7
Table: Israel Proven Oil and Gas Reserves and Total Petroleum Data - Historical Data And Forecasts, 2010-2016 7
Table: Israel Proven Oil and Gas Reserves and Total Petroleum Data - Long-Term Forecasts, 2015-2021 8

Oil Supply And Demand 10
Table: Israel Oil Production, Consumption and Net Exports - Historical Data And Forecasts, 2010-2016 10
Table: Israel Oil Production, Consumption and Net Exports - Long-Term Forecasts, 2015-2021 11

Gas Supply And Demand 14
Table: Israel Gas Production, Consumption and Net Exports - Historical Data And Forecasts, 2010-2016 14
Table: Israel Gas Production, Consumption and Net Exports - Long-Term Forecasts, 2015-2021 15

LNG 18

Refining And Oil Products Trade 19
Table: Israel Refining - Production and Consumption - Historical Data And Forecasts, 2010-2016 19
Table: Israel Refining - Production and Consumption - Long-Term Forecasts, 2015-2021 19

Revenues/Import Costs 20

Key Risks To BMI's Forecast Scenario 20

Country Oil & Gas Risk/Reward Ratings 21

Israel Upstream Rating - Overview 21

Israel Upstream Rating - Rewards 21

Israel Upstream Rating - Risks 21

Israel Downstream Rating - Overview 21

Regional Risk/Reward Ratings 22
Table: Oil & Gas Risk/Reward Ratings 23
Table: Middle East Downstream Oil & Gas Risk/Reward Ratings 27
Table: Middle East Upstream Oil & Gas Risk/Rewards Ratings 28

Israel Energy Market Overview 29

Overview/State Role 31

Government Policy 31

International Energy Relations 32
Table: Israel - Upstream Projects Database 33

Oil And Gas Infrastructure 34

Oil Refineries 34

Oil Pipelines 34

Gas Storage Facilities 34

Gas Pipelines 34

Competitive Landscape 36

Executive Summary 36
Table: Key Players - Israeli Oil And Gas Sector 38
Table: Key Downstream Players 38

Company Profiles 39

Noble Energy 39

Oil Refineries Ltd - Summary 43

Delek Group - Summary 43

Sonol - Summary 44

BG - Summary 44

Paz - Summary 45

Zion Oil & Gas - Summary 45

Bontan Oil & Gas - Summary 46

ATP Oil & Gas - Summary 46

Others - Summary 46

Regional Energy Market Outlook 49

Global Energy Market Outlook 53
Table: Global Oil Demand Forecasts - A Comparison 55

Middle East - Regional Appendix 59
Table: Oil Consumption - Historical Data & Forecasts, 2009-2016 ('000b/d) 59
Table: Oil Consumption - Long-Term Forecasts, 2014-2021 ('000b/d) 59
Table: Oil Production - Historical Data & Forecasts, 2009-2016 ('000b/d) 60
Table: Oil Production - Long-Term Forecasts, 2014-2021 ('000b/d) 61

Table : Refining Capacity - Historical Data & Forecasts, 2009-2016 ('000b/d) 61
Table: Refining Capacity - Long-Term Forecasts, 2014-2021 ('000b/d) 62
Table: Gas Consumption - Historical Data & Forecasts, 2009-2016 (bcm) 62
Table: Gas Consumption, 2014-2021 (bcm) 63
Table: Gas Production - Historical Data & Forecasts, 2009-2016 (bcm) 63
Table: Gas Production - Long-Term Forecasts, 2014-2021 (bcm) 64
Table: Net LNG Exports - Historical Data & Forecasts, 2009-2016 (bcm) 64
Table: Net LNG Exports - Long-Term Forecasts, 2014-2021 (bcm) 65

Methodology And Risks To Forecasts 66

Glossary Of Terms 67
Table: Glossary Of Terms 67

Oil And Gas Risk/Reward Ratings Methodology 69

Ratings Overview 69
Table: BMI's Oil & Gas Business Environment Ratings - Structure 70

Indicators 70
Table: BMI's Oil & Gas Upstream Ratings - Methodology 70
Table: BMI's Oil & Gas Business Environment Downstream Ratings - Methodology 71

BMI Methodology 73

How We Generate Our Industry Forecasts 73

Energy Industry 73

Cross checks 74

Sources 74

Company Profiles
Noble Energy
Oil Refineries Ltd - Summary
Delek Group - Summary
Sonol - Summary
BG - Summary
Paz - Summary
Zion Oil & Gas - Summary
Bontan Oil & Gas - Summary
ATP Oil & Gas - Summary
Others - Summary

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