BMI's Executive Summary

[TOP]

The Sector At A Glance

Key Insights On The Oil & Gas Sector Of Israel

The latest Israel Oil & Gas Report from BMI forecasts that the country will account for 2.45% of MEA regional oil demand by 2010, while making very little contribution to rising oil supply. MEA regional oil demand rose to 10.7mn barrels per day (b/d) last year and should average 10.9mn b/d in 2006, before reaching 12.2mn b/d by 2010. MEA gas consumption in 2005 was 343bn cubic metres (bcm), with demand of 533bcm targeted for 2010. Production last year of 448bcm should reach 774bcm by the end of the decade. Israel's share of consumption in 2005 was just 0.87%, while its share of production was still lower at 0.67%. By 2010, its share of demand is forecast to be 1.50%, with the country accounting for 1.10% of supply.

Assuming an uneventful Q4, we are now predicting an OPEC basket price for 2006 averaging US$61.10/bbl – an increase of US$1.10 from our June forecast. This also represents a 19% rise from the FY05 average. Our forecasts for the US, Brent and Urals are US$66.40, US$65.40 and US$61.60/bbl respectively. For 2007, we continue to assume an OPEC basket price of US$50/bbl, which implies US$55.40 for the US, US$53.40 for Brent and US$49.50 for Urals. Prices are then forecast to fall by around US$5/bbl in 2008-2010, with the OPEC price averaging US$45/bbl over the period.

Israel’s real GDP growth is forecast by BMI at 3.5% for 2006, following 5.2% in 2005. We are assuming 3.9% growth in 2007, 3.2% in 2008, followed by 2.9% in 2009 and 2.6% in 2010. We expect oil demand to rise from 278,000b/d last year to 298,000b/d in 2010, although the state would like to minimise dependency on imports and exploit fully the country’s modest gas resources. A lack of serious upstream prospects and limited international oil company (IOC) participation means Israel is likely to continue importing virtually all the oil needed to supply its domestic refineries. Domestic gas production and consumption are expected to rise following the recent start-up of the Tethys Sea project, with up to 8bcm of supply and demand by 2009/10.

In the BMI Business Environment Ranking matrix, Israel this quarter receives an unchanged composite score of 32, which ranks the country outright seventh out of 16 states included in the MEA region. Israel's overall business environment can be considered neutral in a regional context, thanks largely to a lack of hydrocarbons potential and limited domestic energy demand growth offsetting the deregulated market and moderate levels of perceived economic and political risk. An attractive competitive environment and legislative framework is small consolation when opportunities for IOCs are so restricted.

Contents

[TOP]

Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Israel Political SWOT

Israel Economics SWOT

Israel Business Environment SWOT

Chapter 3 - Regional Market Overview

Middle East/Africa Region

Table: MEA Oil Consumption (000b/d)

Table: Middle East/Africa Oil Production (000b/d)

Table: Middle East/Africa Oil Refining Capacity (000b/d)

Table: Middle East/Africa Gas Consumption (bcm)

Table: Middle East/Africa Gas Production (bcm)

Table: Middle East/Africa LNG Exports/(Imports) (bcm)

Israel

Chapter 4 - Business Environment Rankings

Israel

Middle East/Africa Region

Chapter 5 - Israel Business Environment Ranking

Economics – long-term risk

Politics – long-term risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Labour Force

Foreign Direct Investment

Tax Regime

Chapter 6 - Oil Market Outlook

Table: Crude Price Forecasts 2006

Revised Forecasts

Table: Oil Price Forecasts

Chapter 7 - Regional Supply and Demand

Middle East/Africa

Table: Middle East/Africa Oil Production (000b/d)

Table: Oil Consumption (000b/d) – Middle East/Africa

Chapter 8 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 9 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

Refining and Oil Products Trade

Revenues/Import Costs

Table: Israel Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Israel Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 10 - Economic Outlook

Table: Economic Activity

Chapter 11 - Country Snapshot: Israel Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 12 - Regional Case Study

Global Player With Conflicting Domestic Needs

Chapter 13 - Competitive Landscape

Executive Summary

Table: Key Players – Israeli Oil & Gas Sector

Overview/State Role

ORC – Summary

Noble – Summary

BG – Summary

Delek – Summary

Sonol – Summary

Paz – Summary

Table: Key Downstream Players

Chapter 14 - BMI Forecast Modelling

How we generate our industry forecasts

Energy Industry

Cross checks

Sources

Chapter 15 - Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Network of Middle Eastern and African Oil and Gas Sources

[TOP]

BMI's Middle Eastern and African Oil and Gas Reports are based on an extensive network of multilateral organisations, government departments, oil and gas industry associations, chambers of commerce and company reports. Information sources include: