Sunday, April 22, 2018
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Israel Cannot Substitute Russian Gas Supplies for Europe — Delek Drilling CEO

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"We can be an add-on for suppliers in Europe, we can supply European countries, but we are humble. We have to be humble here. Because while Russia supplies to Europe roughly 200 bln cubic meters per year, we are talking about an ability to supply maybe 10 to 20 bln cubic meters a year," Abu said.

"We need to take it in the right perspective. And the right perspective is: we cannot supply all the needs of Europe, or even the need of a specific country in Europe. We are not in any way in shape to replace Russia - for sure. There a growing demand that we can meet in specific market. We can be a supplier to Europe, an important supplier, but it is an add-on, but not as something that can replace or compete even with aby other counties that supply Europe right now," he said.

The gas production cost in Russia is much cheaper than in Israel, the top manager said. "We are much more expensive than Russia from production cost. Because usually in Russia they produce on on-shore fields. The cost of production is very very cheap. We are working on a very deep-water activity. Although we have a world class assets, the cost is higher than on on-shore activities," Abu said.

At the same time, Israel has a "better entry point to Europe than other suppliers," Delek Drilling CEO said. The distance from Turkey is just 500 km, he said. "We have balance in the overall ability to demonstrate to Europe" that we can be "a competitive producer and supplier," he added.

Russian companies are participating in tenders held by the consortium developing Israel’s offshore gas fields, he went on.

"Russian companies are taking part in bids we are submitting to the market," Abu said. "Because of confidentiality I cannot tell you who win what. But they are definitely part of the bidding entities," he said.

"We are taking competitive bidders. So they are there," he added.

Delek Drilling holds 22.67% in the consortium developing Israel’s offshore gas fields. Consortium members are also Israeli Avner Oil & Gas (22.67%) and Ratio (15%) and US Noble Energy (39.66%).

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