The decision to award the license, coming just ahead of Israeli Prime Minister Benjamin Netanyahu's proposed mid-January visit to India, is being seen as...
another step in strengthening ties between the two countries.
The consortium of ONGC Videsh, Bharat PetroResources, Indian Oil and Oil India will be granted an exploration license while Greece's Energean will receive five licenses, Israel's Energy Ministry said in a statement.
Israel's energy ministry gave its preliminary approval on December 11 to the bid for one block submitted by the Indian consortium of OVL, IndianOil, Oil India Ltd and Bharat Petroleum subsidiary Bharat Petro Resources Ltd. Energean of Greece was the other bidder to have secured approval for five blocks.
ONGC Videsh MD NK Verma confirmed the development to a national daily. He said the consortium will go through certain processes before deciding on drilling for oil or gas in the block.
This was the first auction of exploration licences, comprising 24 blocks, in four years since Israel blocked foreign companies from exploration in its eastern Mediterranean waters. The permission to the Indian consortium comes ahead of Israeli Prime Minister Benjamin Netanyahu's three-day visit to India from January 14 and indicates the willingness of both governments to expand the horizon of bilateral ties from security and defence to energy security.
Defence has so far remained priority area between India and Israel. Indian consortium and the Greece firm were the only bidders in the first Israeli Offshore Licensing Round that closed last month. The auction, launched in November 2016, was extended twice to attract more bidders. It offered 24 blocks with an estimated in-place reserve of 6.6 billion barrels of oil and 2137 billion cubic meters of natural gas.
Within 30 days of winning announcement, the bidders have to pay signature bonus, license fee and offer appropriate guarantees to complete the granting of the licenses.
ONGC Videsh, as a new operator in Israel, must appoint a local representative and be registered as a foreign company in Israel's Corporations' Authority, the statement said.
The winners would get an exploration license for three years. This in turn can be extended by another three years if the licensee has implemented the work plan and commit to carry out drilling during the extension period.
A license holder has to deposit a guarantee of $2.5 million to $10 million, pending on the work program commitments. The process to include oil in areas of bilateral cooperation began ahead of PM Narendra Modi's July visit to Israel. Israeli energy minister Yuval Steinitz called on Petroleum Minister Dharmendra Pradhan in June to invite Indian participation in that country's exploration business, dominated by Delek Group and Isramco Negev. The two connected again earlier this month as the Indian bid was being cleared.
Israel, with major gas reserves, has emerged as a greener pasture for the Indian consortium.
India’s decision to allow PSUs to bid in Israeli block auctions also sends a strong message to Iran — Israel's arch rival — as it comes in the face of global players keeping off for fear of reprisal from their Arab benefactors.
India's relations with Iran have cooled off recently over Tehran's failure to award Farzad-B to the OVL-led consortium in spite of commitments made by top leaders on both sides to see the deal through quickly.