Shaul MeridorDirector GeneralMinistry of Energy

IsraeliGasOpportunity

Main Indicators of Israel’s Economy

Population 8.5 million

GDP (current US $, (2015 $ 300 billion

GDP per capita (current US $, (2015 34,000$

Average GDP Annual Growth 2006-2015) ) 3.8%

Unemployment (2015, August) 5.3%

No.1 worldwide in technology startups per capita

Member of the OECD since 2010

Sovereign credit rating – A+ / A1

Status of Exploration & Production in Israel

Oil Field

Gas Field

Pipelines

Legend:

Production Platform-100

-

2000

Aphrodite/Ishai

Leviathan

Karish

Tanin

Dalit

Tamar

Tamar SW

Shimshon

Noa

MariB

10 gas fields were discovered in

the Israeli EEZ over the past 15

years, including the giants Tamar

and Leviathan.

Recoverable gas reserves and

resources are estimated at more

than 30 TCF of gas and 50 MMBL

of condensate

3 gas fields were developed

Development plan for the

Leviathan field is underway and

first-gas is expected in 2019

Israeli Regulation – Oil & Gas

Ministry of National

Infrastructure, Energy

and Water Resources

Ministry

of Finance

Ministry of

Environmental Protection

Ministry Petroleum

CommissionerNational Gas

Authority

Downstream

• Safety & engineering

Upstream

• G&G and Environment

• Safety & engineering

• Royalties- 12.5%

• Oil and gas profits levy

• The formula is of the R factor type:

• The levy will apply only after return of 150% on investment.

• The levy is progressive - the rate increases with the increase in profits

Israel fiscal system- Oil & Gas

R-Factor

Levy Rate

50%

20%

1.5 2.30%

Israel fiscal system- Oil & Gas

4,000

2,000

1,000

0

1,000-

2,000-

3,000-

4,000-

Large gas field- High level of profitability

Years

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34

Cash Flow Exploration and

development expenses

Expenses during the

project

Royalties

Oil and gas

profits levy

Corporate tax Revenues

2,000

1,000

0

1,000-

2,000-

3,000-

4,000-

Years

Cash Flow Exploration and

development expenses

Expenses during the

project

Royalties

Oil and gas

profits levy

Corporate tax Revenues

Small gas field- Low level of profitability

0 1 2 3 4 5 6 7 8 9 1011 12 1314 15 1617 18

Government Natural Gas Policy - Exports

• Securing supply of 540 BCM for domestic market

• Quotas per reservoir (50%-100%)

• Signed agreements in place, more in progress

Government Natural Gas Policy - Framework

• Resolves Anti-Trust and competition Issues

• Provides conditions for timely development

• Establishes an environment set to incentivize investment

• OECD as benchmark for new regulation

Incentives For Marginal Fields

• Today: each reservoir must be connected to shore

separately.

• Challenges:

High cost

Statutory Approvals

Coordination

• Incentive for marginal fields:

Government pipeline from platforms to shore

(continental shelf)

Export Options

1. Egypt

2. Jorden

3. Turkey

4. Palestinian Authority

5. Europe

Export Agreements

• Signed export agreements:

Jordan -( aeS daeD eht ta seitilicaf lairtsudnI1.9 BCM from Tamar)

Egypt– Dolphinus Holdings Ltd. (5 BCM from Tamar)

•Agreements being discussed:

Jordan – LOI with National Electric Power Co. (45 BCM, Leviathan)

Egypt - LOI with BG (LNG facility, 106 BCM, Leviathan)

Egypt - LOI with Union Fenosa Gas (LNG facility, 70 BCM, Tamar)

Demand for Natural Gas by Sector (2014-2040)

• Coal restrictions

• Support of NG transmission

• Subsidies for industrial customers

• Long term planning

IHS, 2016

Thank you