Russia’s invasion of Ukraine, price hikes, and a European pipeline explosion have been among the upheavals in the energy sector over the past 18 months, but there are also reasons for optimism coming from Israel all over the place. Israeli technologies provide enormous opportunities for the global energy industry, among other things, by helping to achieve more efficient and less polluting production.
The Globes Energy 2023 conference takes place on Tuesday (tomorrow) in Tel Aviv in partnership with Energean plc (LSE: ENOG; TASE: ENOG) and Halliburton Co (NYSE: HAL). The conference will focus on progress in an area often seen as outdated, but which is also an innovative arena and serves as a catalyst for economic and regional development. The conference will address the development of the energy sector by encouraging Israeli innovation, and will examine the growth drivers derived from innovative developments in this field and the opportunities inherent in multi-sectoral cooperation.
Before the event, Mateus Rigas, CEO of Energean, which has a concession for the Israeli offshore gas fields Karish, Tanin and Olympus, explained to “Globes” about the good news that the emerging country can bring to the global energy industry, about the competitive arena in Israel, and emphasizes On the advantages produced by the shortage of energy sources in Europe.
“The idea to use Israeli technology arose from my conversation with the CEO of Halliburton,” Regas says. “He told me what they were doing in terms of developments in the energy field, and I offered ideas for improvement.” Energy giant Halliburton operates its innovation arm, Halliburton Labs, which promotes startups with potential benefits to the global energy industry.
Rigas, who knows Israel well from his company’s natural gas exploration and production operations, believes the best place to find startups is in Israel. “The goal is to help Israeli startups develop ideas.”
Zero emissions. How will you do that?
Rigas was born in Greece and studied energy engineering in Athens, earning an M.Sc. at Imperial College, London. During his time in the UK he worked for an international bank before setting up a fund for Greek start-ups in Athens. But the fund closed and then joined the oil company Brenos.
In 2007, he founded Rigas Energean after successfully raising $100 million from US investors. In 2019, he announced that the company would adopt a “zero emissions” policy by 2050. “At that time,” says Rigas. “People have asked me how are you going to do this? I told them I don’t know but there’s where we have to go. Within a year of making the decision, Energean had cut its carbon emissions by 67%.”
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The energy industry is looking forward to Israeli innovation
Despite this, the external image of the energy industry is outdated.
“In order to produce, we need to go 3,000 meters below sea level, drill and get to a relatively small site. Geological analyzes are also required. The old picture is wrong, and Halliburton agrees with us in thinking that any solution can make work more efficient, cheaper and faster.” – He will contribute a lot.
“Technology can help the whole chain: from siting, drilling, and production to minimizing emissions. When we drill, it’s done when there’s a 25% chance of success. To invest $150 million with a 25% chance of success.” He suggests such a thing to the manager, he’ll think he’s lost it. There’s a 75% chance of losing money, but that’s the business. Anything that improves the production odds from the tanks would be huge news.”
“The potential in the eastern Mediterranean is huge
Energean recently announced that it is interested, subject to DOE approval, in advancing the development of the offshore Olympus gas field prior to the Tanin field by connecting it to the Karish rig, in order to optimize the utilization of gas resources. at her disposal. The main advantage of production from Olympus is that it doesn’t have to pay royalties to Delek Drilling (now called NewMed Energy), which it sold the franchise to Karish and Tanin.
“Olympus is not a huge field,” Regas asserts, adding that Israel has an opportunity to explore and find more natural gas that will allow it to strengthen its geopolitical position. “People should understand that Israel is the only country whose inflation was not caused by energy. Because of Energean production, gas prices have fallen while in Europe they have gone up. This is the time to expand the force, not only by providing cheap gas to the country but also for export.” From them, including to Europe.
In your opinion, how big is the gas potential in the eastern Mediterranean?
“The potential in the eastern Mediterranean is huge,” Rigas insists. According to data from the Natural Gas Authority at the Ministry of National Infrastructures, Energy and Water Resources, although natural gas production peaked in 2022, at the same time 42% of production was exported.
The energy crisis in Europe only emphasized the need for a stable domestic energy economy. Until Russia’s invasion of Ukraine in February last year, the EU consumed about half of its natural gas from Russia, and between January and November last year, the figure dropped to only about 26%. “The EU has decided to stop buying from Russia and someone needs to replace it,” says Rigas. “And as we mentioned, the potential is huge because there is huge demand, while the only region with new discoveries is Israel.”
There are bureaucratic constraints in Israel, Rigas notes, “but despite the difficulties and delays, there are sufficient reservoirs. Three of them produce more than Israel needs, unlike the other countries. And that is something to be proud of.” For comparison, you can look at Egypt, Greece and Italy. that depend on its gas.
About regional competition and the existence of Chevron
In recent years, the Israeli gas sector has witnessed active competition between three gas suppliers and Energean which has led to a significant drop in prices in favor of gas consumers. The competition grew from the instructions of the Gas Scheme, which required Noble Energy and Delek Drilling to sell the Karish and Tanin fields to reduce their influence in business decisions due to their joint ownership of the Tamar and Leviathan fields.
How do you see the competitive environment in Israel?
“Competition is important because it cares about the market and it must be fair and in accordance with the laws set by the government. Having big companies like Chevron is good for two reasons. The first is that it brings technology and money. Secondly, every company that enters brings political support to the region. In this way the region becomes more stable. I I support competition, especially if it is against powerful companies that can bring stability, money and power to the region.
“If Israel allows – we will join the energy exploration in Lebanon”
Energean found itself at the center of the storm during talks to establish a maritime border between Israel and Lebanon, through which the Karish field passes. Production was delayed due to ongoing negotiations on the maritime border agreement, and Hezbollah’s threat to attack the gas platform if Lebanon did not accept all of its demands.
Since the signing of the agreement, Israeli gas has begun to flow through pipelines from Karish, while no significant developments have taken place on the Lebanese side. In September, a consortium of French major Total Energy, Italy’s Eni and Qatar Energy is expected to start drilling in Block 9, close to the maritime border with Israel.
Are you interested in joining the exploration for natural gas in Lebanon?
“As I said before, if the (Israeli) government allows us, we will,” says Rigas. “We have knowledge, drilling capabilities and money. But this is something that must come from governments. We respect the government’s decisions, and we have always trusted the Israeli government. Even when Hezbollah threatened us, our messages were emphasizing that we trust the government and that is why we started production from Karish despite the threats.”
Full disclosure: On Tuesday, May 30, the ENERGY 2023 Globes Conference will be held in Tel Aviv in collaboration with Energean and Halliburton.
Published by Globes, Israel business news – en.globes.co.il – on May 29, 2023.
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