Boston, MA -- (SBWIRE) -- 03/14/2014 -- Gas production from the Tamar field is expected to ramp up considerably since coming online in March 2013 and will make Israel self-sufficient in natural gas supplies for the first time ever. We expect stagnation in production growth through to 2015 as bottlenecks at the onshore receiving facility at Ashdod will limit production to 10.5bcm. This should be resolved by 2016 in sufficient time to take output from the Leviathan field where development will begin in mid-2014. Gas from Leviathan could flow from late 2018 with export opportunities increasingly likely from this point. We see comparatively strong liquids upside with growing condensate volumes from Tamar and eventually Leviathan. Furthermore, near shore licences are showing greater likelihood of condensate and oil providing upside for the oil reserves outlook.

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We highlight the following trends and developments in Israel's oil and gas sector:

- In October 2013 the Israeli Supreme Court upheld the government's decision to retain 60% of proven reserves for domestic use. Other groups were petitioning for a complete ban on exports. This decision also recommends the Tamar field to be used purely for domestic needs, while will allow up to 75% of Leviathan's reserves to be exported.
- Development of the Leviathan field will be delayed by as much as one year due to the slow progress on the government's move to push through export allowances. Development, which could have begun in 2013, will now begin in mid-2014 with first production expected in 2018.
- The Tamar natural gas field entered production in March 2013 at approximately 8.4mn cubic metres/day (3bcm annually) with ramp-up to a peak of 27.6mn bcm/day (10.1bcm). Our 2013 gas production estimate for Israel is 6.86bcm, a conservative average to factor in declining volumes from Mari-B and the ramp up (though not full) from Tamar.
- We have revised our gas production forecast due to bottlenecks at the Ashdod receiving terminal and the Leviathan delay. We anticipate natural gas output to reach 6.86bcm in 2013 then flatten at around the 10bcm mark until new receiving terminals are put in place by 2016. Stronger growth is projected from 2018, when the Leviathan field is expected to add output. We anticipate natural gas production to be around 17bcm by 2019, though anticipate considerable upside from an export project at the Leviathan field. This will be factored in once there is a clearer picture of export routes and project outlines.
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