Ratio CEO: Not likely we’ll find much oil

"Drilling an oil well is a major technological challenge, and it has never been done in the East Mediterranean Basin," Ratio Oil Exploration (1992) LP CEO Yigal Landau said Monday at the Globes Israel Business Conference.

"Gas is a separate matter, unrelated to the oil market, and prices do not go hand in hand either," he said. "As for oil, there is a pioneering effort under way, which will have huge repercussions on the entire exploration industry in Israel’s exclusive economic zone and probably on Cyprus’s as well."

Landau spoke about the chances of finding oil at the recent offshore gas discoveries, on the conference’s "Sources of energy-high tension" panel, which discussed the impact of energy prices on the global economy and Israel’s place in the global energy market in view of the offshore naturalgas discoveries.

"The chances of finding oil are currently estimated at 8% - and 16% on the basis of two prospects," he said. "These are very low probabilities, which I prefer to call an engineering challenge. We are trying to weigh all the considerations before drilling a well."

Regarding the prospects for gas exports, Landau said: "A US Geological Service report estimated Israel’s gas discoveries in the Levant Basin at 120 trillion cubic feet. This requires a lot of development.

Gas export restrictions will doom further gas exploration, because we’re talking about investments of hundreds of millions of dollars for each rig.

Without the necessary regulatory certainty, which must be settled fast, a market player cannot continue to develop the fields."

Landau said regulatory problems arising from the government treatment of the oil and gas industry were harmful.

"The delay in the Sheshinski Committee decisions contributed to regulatory uncertainty and delayed the development of fields by Israeli companies with the relevant licenses," he said. "This resulted in losses to both the state and the Tamar partners, which lost revenue this year."

Ratio is a partner in the Leviathan field, along with Noble Energy Inc. and Delek Group Ltd., which are also partners in the Tamar field.

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