Israel's Shemen Gets Okay for Offshore Oil Drill

Shemen Oil and Gas Resources said it had received approval to drill for oil off Israel's southern Mediterranean coast from the Defence Ministry and military, paving the way for operations at its Yam-3 drill to begin.

Shemen plans to drill in relatively shallow water 16 km off the coast of Ashdod, a major port that is also home to a naval base and one of Israel's two oil refineries.

Shares in Shemen were up 17 percent in midday trade in Tel Aviv.

Consulting firm Netherland and Sewell Associates estimated there is the potential for 227 million barrels of oil and 3 trillion cubic feet of natural gas in the Shemen/387 licence.

Shemen, whose chairman is former armed forces chief of staff Gabi Ashkenazi, estimated the cost of the drill at $98 million.

Negotiations with the military lasted nearly a year.

Avi Bnayahu, who was previously the top spokesman for Israel's armed forces and is a strategic adviser to Shemen, said there are military activities in the area of the drill that required defence approval.

"In the past there was a phenomenon that to any request to carry out economic or civilian initiatives the armed forces would say 'Not in my backyard.' In recent years the military has sought a path of compromise," he told Reuters.

Shemen said it had signed an agreement with Atwood for leasing the Atwood Beacon rig.

Israel currently imports nearly all of its crude oil, mainly from Russia.

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