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

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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

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DE RUEHTV #4234 2971512
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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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JONES