Israeli tech may bring good news to energy sector
The Russian invasion of Ukraine, price rises and the European pipeline gas explosion have been among the upheavals in the energy sector over the past 18 months, but there are also reasons for optimism that come from Israel, Mathios Rigas, the CEO of Energean, told Globes Energy 2023 Conference on Tuesday.
Israeli technologies provide tremendous opportunities for the global energy industry, among other things, by helping achieve more efficient and less polluting production.
The conference was held in Tel Aviv was in partnership with Halliburton Co and focused on advancement in a field that is often perceived as outdated, but which is also an innovative arena and acts as a catalyst for economic and regional development.
The conference dealt with the development of the energy sector through the promotion of Israeli innovation, and examined the engines of growth derived from innovative developments in the field and the opportunities inherent in multi-sector collaborations.
Ahead of the event, Rigas, the CEO of Energean, which has the concession to the Karish, Tanin and Olympus offshore Israeli gas fields, explained to Globes about the good news that the start-up nation could bring to the global energy industry, spoke about the competitive arena in Israel, and stresses the advantages produced by the lack of energy sources in Europe.
“The idea of using Israeli technology arose from my conversation with the Halliburton CEO,” recounts Rigas. “He told me what they were doing regarding developments in the energy field, and I presented ideas for improvement.” Energy giant Halliburton operates an innovation arm, Halliburton Labs, which promotes startups with potential benefits for the global energy industry.
Rigas, who knows Israel well through his company’s operations in discovering and producing natural gas, thinks that the best place to find start-ups is in Israel. “The aim is to assist Israeli start-ups in developing ideas.”
Zero emissions. How will you do it?
Rigas was born in Greece and studied energy engineering in Athens and earned an MSc at Imperial College, London. During his time in the UK he worked for an international bank before establishing a fund for Greek start-ups in Athens. But the fund closed down and he then joined the oil company Prinos.
In 2007, Rigas founded Energean after successfully raising $100 million from US investors. In 2019, he announced that the company would adopt a zero emissions policy by 2050. “At the time,” says Rigas. “People asked me how will you do this? I told them that I don’t know but this is to where we have to go. Within a year of taking the decision, Energean has reduced its carbon emissions by 67%.”
Despite that, the external image of the energy industry is of being outdated.
“In order to produce, we need to reach a depth of 3,000 meters below sea level, drill and reach a relatively small location. Geological analyses are also required. The outdated image is wrong, and Halliburton agrees with us in thinking that any solution that can make the work more efficient, cheaper and faster – will contribute a lot.
“Technology can help the entire chain: from locating, drilling, and production to reducing emissions to a minimum. When we drill, it is done when there is a 25% probability of success: To invest $150 million with a 25% chance of success. Whoever proposes such a thing to a manager, would think that he has lost it. There is a 75% chance of losing the money, but that’s the business. Anything that improves the odds of production from reservoirs would be tremendous news.”
The potential of the eastern Mediterranean is huge
Energean recently announced that it is interested, subject to approval from the Ministry of Energy, in bringing forward development of the Olympus offshore gas field ahead of the Tanin field by connecting it to the Karish rig, in order to take optimal advantage of the gas resources at its disposal. The main advantage of producing from Olympus is that it does not have to pay royalties to Delek Drilling (now called NewMed Energy), which sold it the concession to Karish and Tanin.
“Olympus is not a huge field,” stresses Rigas, and adds that Israel has the opportunity to drill and find more natural gas that will allow it to strengthen its geopolitical status. “People must understand that Israel is the only country where inflation has not been caused by energy. Due to Energean’s production, gas prices have fallen while they soared in Europe. This is the right time to expand the strength, not only by providing cheap gas to the country but also exporting out of it, including to Europe.”
How big is the gas potential in the eastern Mediterranean?
“The potential in the Eastern Mediterranean is huge,” Rigas insists. According to data at Natural Gas Authority at the Ministry of National Infrastructures, Energy and Water Resources, although natural gas production peaked in 2022, at the same time 42% of production was exported.
Europe’s energy crisis added to the need for a stable domestic energy economy. Until Russia’s invasion of Ukraine in February last year, the EU consumed about half of its natural gas from Russia, and between January and November last year, the figure dropped to only about 26%. “The EU has decided to stop buying from Russia and someone needs to replace it, so the potential is huge.”
How do you see the competitive environment in Israel
“Competition is important because it takes care of the market, and it should be fair and according to laws established by the government. The presence of large companies like Chevron is good for two reasons. The first is that they bring technology and money. Second, every company that enters brings with it political support for the region. This way the region becomes more stable. I favor competition, especially if it’s against strong companies that can bring stability, money and power to the region.”
Energean found itself in the eye of the storm during the talks to set a maritime border between Israel and Lebanon, through which the Karish field passes. Production was delayed due to the continuation of the negotiations on the border agreement and due to Hezbollah’s threat that it would attack the gas rig if Lebanon did not accept all its demands.
Since the agreement was signed, Israeli gas has begun to flow through pipelines from Karish, while on the Lebanese side there have been no significant developments. In September, a consortium of French major company Total Energies, Italy’s ENI and Qatar Energy is expected to start drilling in Block 9, which is near the sea border with Israel.
Are you interested in joining gas exploration in Lebanon?
“As I have said before, if the (Israeli) government allows us, then we will do it. We have the knowledge, the drilling capabilities, and the money. But this is something that needs to come from the government.”
(Globes/TNS)