Israel set to expand local Oil Production

The deepest oil well drilled in Israel’s 65-year history may be the most important.

Houston’s Noble Energy Inc. (NBL) will probe 6,500 meters (4 miles) below the Mediterranean seabed later this year, targeting as much as 1.5 billion barrels of crude, equal to about 15 years of Israeli demand.

While explorers have found enough natural gas in the past five years to turn Israel into an exporter, a major oil discovery would break new ground. The Middle East’s third-largest economy spends about $10 billion a year importing 98 percent of the oil it uses. Domestic production would increase tax revenue, boost the country’s balance of payments and reduce vulnerability to supply disruptions.

“The economic impact on Israel would be far greater than that of natural gas,” David Wurmser, director of the Washington-based Delphi Global Analysis Group, said in a phone interview. “Finding the oil would mean big money for the Israeli companies and the government.”

Noble isn’t the only explorer hunting for oil. Shemen Oil & Gas (SMOG) Resources Ltd. is looking to hit an oil field reckoned to hold 120 million barrels by the end of August. Gabi Ashkenazi, once Israel’s top general and now Shemen’s chairman, said finding crude will enhance the country’s security.

“If we are successful, it will be a strong push to the economy, and to the strategic objective to become energy independent,” said Ashkenazi, 59, who spent four years heading the armed forces before retiring in 2011. “Oil will be an important factor in this.”

Bloomberg

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