2013-10-10 11:29:21 - New Energy research report from Business Monitor International is now available from Fast Market Research
Gas production from the Tamar field is expected to reach 27.6mcm/day (10.1bcm) by the end of the year making Israel self-sufficient in natural gas supplies for the first time ever. We expect stagnation in production growth through to 2015 as bottlenecks at the onshore receiving facility at Ashdod will limit production to 10.5bcm. This should be resolved by 2016, while we expect 2017 to be the first year the country exports natural gas, most likely from the Tamar FLNG facility. We see comparatively strong liquids upside with growing condensate volumes from Tamar and eventually Leviathan. Furthermore, near shore licences are showing greater likelihood of condensate and oil providing upside for the oil reserves outlook.
We highlight the following trends and developments
in Israel's oil & gas sector:
Full Report Details at
* The Tamar natural gas field entered production in March 2013 at approximately 8.4mn cubic metres/day (3bcm annually), with ramp-up over the summer to reach 27.6mn bcm/day (10.1bcm) by the end of the year. The gas produced will be delivered via the existing Mari-B pipeline to the onshore terminal at the city of Ashdod in southern Israel. Our 2013 gas production forecast for Israel is 7.6bcm, a conservative average to factor in decline volumes from Mari-B and the ramp up (though not full) from Tamar.
* Companies with an interest in Israel's offshore are awaiting a court ruling, expected on September 17, which could create the requirement for parliamentary approval for gas exports. This could mean caps will be put in place on the amount of gas that can be exported from the country. It is expected an export cap of 40% will be applied to newly discovered gas fields.
* We have revised our production forecast due to bottlenecks at the Ashdod receiving terminal. We anticipate natural gas output to reach 7.6bcm in 2013 then flatten at around the 10bcm mark until new receiving terminals are put in place by 2016. Stronger growth is projected from 2017, when the Leviathan field is expected to come onstream and exports from the Tamar FLNG facility could begin. We anticipate natural gas production to be over 20bcm a year from 2018.
* A final investment decision on the Tamar FLNG facility is due to be made before the end of 2013. We are anticipating Noble Energy's project to go ahead, particularly as Gazprom have signed a heads of agreement to purchase all LNG from 2017. If completed, a maximum of 4.1bcm of natural gas will be exported every year for 20 years from the Tamar field.
* Israeli natural gas consumption is forecast to expand significantly in 2013, far exceeding average gas consumption rates prior to the Egyptian revolution and increased gas import pipeline attacks, which caused a significant drop in consumption. Consumption in 2013 is forecast to be 7.1bcm, up 145% from 2.88bcm in 2009. Over the long term, the country's growth as a gas exporter will raise the economy's dependence on natural gas, pushing forecast consumption to 13.5bcm by 2022.
* In January 2013, Modiin Energy secured approval from the Israeli government to drill for natural gas in the offshore Gabriella licence. Estimates prepared by Sewell & Associates calculate that the licence holds 208mn barrels of oil and 95.2bn cubic metres of natural gas.
* In May 2013, Noble Energy hit more gas offshore Israel at the Karish-1 well off the Haifa coast. Noble and its partner Delek Drilling encountered a 60m layer of gas in drilling the deepwater well in water depths of 4,315m. According to Israeli newspaper Hareetz, the partners had earlier estimated that the reservoir could contain about 56bn cubic metres of gas. However, further appraisal will be necessary to determine the commerciality of the find.
* In August 2013, Shemen Oil & Gas also reported significant signs of natural gas and possibly oil in their Yam-3 well offshore Ashdod. Preliminary indications show the upper target strata has a thickness of 90m containing condensate gas and possible light oil. While developments are still preliminary, it continues the positive developments in Israel's offshore.
* Israeli oil consumption is expected to decline steadily and substantially, from a high of around 244,000b/ d in 2013 to approximately 203,000b/d by the end of the forecast period in 2022 as natural gas substitution gathers momentum. Crude oil production will increase to 890b/d in 2013 on the back of increased condensate output, and will rise to 2,570b/d by 2022 with growth driven by the Leviathan field.
* The 10,000b/d upgrade at the Ashdod refinery is expected to be completed by the end of 2013. This will increase capacity at the Paz run facility to 90,000b/d and raise Israel's overall refining capacity to 296,000b/d. We do not envisage significant further upgrades or any new oil refining facilities over the forecast.
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