ExxonMobil Moves Toward Israeli Gas Market Amid Emerging Energy Competition
After years of limited interest from major global energy companies in exploring Israel's offshore gas, ongoing talks between Energean and American energy giant ExxonMobil signal renewed optimism for the Israeli Energy Ministry. The discussions focus on a joint bid for Israel's fifth natural gas exploration round, launched last week after a five-month delay due to regional conflicts. The tender covers six exploration blocks spanning approximately 7,600 square kilometers in Israel's economic waters, each potentially holding around 50 billion cubic meters of natural gas and possibly oil in deeper layers.
Energy Minister Eli Cohen and Energy Ministry Director Yossi Dayan highlighted the significance of ExxonMobil's interest, noting it reflects Israel's continued attractiveness for energy investments despite regional instability. Currently, Energean and ExxonMobil are in early stages of collaboration for the Israeli tender, building on their existing partnership in a gas exploration project near the maritime border between Greece and Italy. In that project, Energean operates with a 30% stake, ExxonMobil holds 60%, and HelleniQ Energy owns 10%, with ExxonMobil set to lead development if commercial discoveries occur.
Energean holds a unique position in the Israeli tender, benefiting from full scoring advantages as it has sold all gas reserves from the Karish field to the local market, unlike incumbent companies that receive lower scores to encourage new entrants. Chevron and NewMed Energy, partners in the Leviathan field, are barred from participating in this round. ExxonMobil's potential entry would mark a strategic shift, as it is the largest American energy company by market value and second globally after Saudi Aramco. Past concerns about regional risks have eased following Chevron's successful operations in Israel since acquiring Noble Energy in 2020.
Industry experts suggest ExxonMobil's involvement could pave the way for other international energy firms to enter Israel, attracted by the Eastern Mediterranean's relative stability compared to the Persian Gulf. Factors influencing these companies include reconstruction needs in Syria, rising gas demand in Egypt and Jordan, and ongoing European demand amid the Russia-Ukraine conflict.
Despite the positive outlook, previous exploration rounds yielded limited results, with only smaller fields discovered and some rounds ending unsuccessfully or delayed by legal issues. The Energy Ministry remains hopeful that this round will enhance Israel's energy security, increase gas reserves, and eventually boost market competition, potentially lowering electricity prices. However, the process from tender to commercial discovery and development is lengthy, with initial exploration expected to take about three years and development several more. The ministry does not anticipate discoveries on the scale of Leviathan's 600 billion cubic meters but expects smaller finds to attract further international investment and establish long-term activity in Israel's gas sector.
