Cablegate: Modest Discovery of Oil in Dead Sea Basin Could

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Carol X Weakley 10/25/2006 03:06:35 PM From DB/Inbox: Carol X Weakley

Cable
Text:

UNCLAS TEL AVIV 04234

SIPDIS
CXTelA:
ACTION: ECON
INFO: IPSC SCI IMO CONS RES POL DCM AMB AID ADM FCS
PD

DISSEMINATION: ECON
CHARGE: PROG

APPROVED: ECON:WWEINSTEIN
DRAFTED: ECON:MRINCON
CLEARED: ECON: JWITOW

VZCZCTVI366
RR RUEHC RUEHXK RUCPDOC RHEBAAA
DE RUEHTV #4234 2971512
ZNR UUUUU ZZH
R 241512Z OCT 06
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC 7172
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUCPDOC/USDOC WASHDC
RHEBAAA/USDOE WASHDC

UNCLAS TEL AVIV 004234

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: EPET EINV PREL IS
SUBJECT: MODEST DISCOVERY OF OIL IN DEAD SEA BASIN COULD
OPEN DOOR TO INTERNATIONAL INVESTMENT

1. (U) Genco Oil and Gas Exploration, an Israeli company that
has been drilling in the Dead Sea basin for ten years,
recently struck oil at Zuk Tamur 3 -- a 1,800 meter deep
drill site -- and discovered reserves the company estimates
at between four and six million barrels, worth about $300
million. Genco and partner Lapidoth Israel Oil Prospectors
expect to find more as exploration continues, and, according
to Genco geologist Eli Tenenbaum, early tests indicate that
the drill site could supply between 100 and 200 barrels of
crude daily in the near future, and up to hundreds of
thousands of barrels in total. The primary value of this
modest discovery, Tenenbaum added, is to show prospective
investors that the area has potential for oil exploration.

2. (U) National Infrastructures Minister Benjamin Ben Eliezer
hailed the discovery as "just the beginning," and noted that
the Dead Sea basin would be open to interested companies for
drilling. Another Israeli company, Delek Drilling Ltd., has
bought into the project, and has agreed to take a 50 percent
stake in key Dead Sea oil drilling projects run by Genco.
Genco intends to continue its exploration at ten sites, the
next of which will be the Zuk Tamur 4 site, which studies
have shown is likely to hold five million barrels of oil.
The project will cost approximately $800,000. (Note: The
search in the area began ten years ago, but was put on hold
because Genco did not deem it economically viable. However,
due to the recent rise in oil prices, it was renewed. End
note.)

3. (U) Israel currently only produces about 100 barrels of
the approximately 250,000 barrels of oil it consumes per day.
Sixty percent of its imports come from Russia, and another
15 percent come from the Caspian Sea Basin countries of
Kazakhstan and Azerbaijan. In an effort to reduce Israel's
$14 million daily expenditure on energy imports, National
Infrastructures Minister Benjamin Ben Eliezer signed an order
in April 2006 allowing offshore exploration, overriding a
previous order from 2000 that closed the sea to such
exploration. In mid October, the National Infrastructures
Ministry granted PetroMed, a Canadian-based oil and gas
exploration company, a permit to begin exclusive exploration
of hydrocarbons in a 3,500 square kilometer area off the
coast of Haifa. According to PetroMed CEO Hagai Amir, the
company's mission is to help Israel free itself of dependence
on imported oil and gas.

4. (SBU) Comment: Although oil has been discovered in Israel
before, the quantity and quality of the oil has not justified
commercial production. It is doubtful that Genco's and any
future discoveries will substantially reduce Israel's
dependence on foreign oil. However, they will likely open
the door to more cooperation with international investors, as
Israel increasingly looks to diversify its operations in the
extractive sector and locate alternative sources of energy
abroad. Such cooperation could help maximize Israel's
limited fossil fuel resources. End comment.

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