Delek Drilling, Avner Decline on Export Concerns: Tel Aviv Mover

May 19 (Bloomberg) --Delek Drilling-LP (DEDRL) and Avner Oil Exploration LLP (AVNRL) led declines on Israel’s benchmark index on concern uncertainty on government-imposed export quotas would hinder further development of offshore gas fields.

Delek Drilling, whose interests include the Tamar and Leviathan natural gas fields, dropped 1.2 percent, the most since May 12, to 15.28 shekels at 3:19 p.m. in Tel Aviv. Shares of Avner slid as much as 1.8 percent and were trading 0.9 percent lower at 2.633 shekels. The benchmark TA-25 Index (TA-25) gained 0.5 percent.

Discoveries off the coast of Israel are forecast to meet domestic needs for the next 20 years and enable the country to become a natural gas exporter. The amount the country should export has been debated, especially after two wells were found to be dry holes, and Prime Minister Benjamin Netanyahu’s government has still to approve recommendations made by a panel in August.

“There are concerns that just a fraction of the gas will be allowed to be used for exports,” Gilad Alper, senior analyst at Excellence Nessuah Brokerage Ltd. in Ramat Gan, said today by phone. “This would have an impact on the valuation of these companies and also turn away prospective investors. No one is going to bother to drill.”

A government-appointed committee recommended as much as 500 billion cubic meters (18 trillion cubic feet) be allowed for export. Opposition Labor party leader Shelly Yachimovich is among those that have called the amount into question.

Revenues Slowed

In April, Noble Energy Inc. (NBL)’s Chief Executive Officer Charles Davidson, a partner in Tamar and Leviathan, said the latter project may be at risk if the panel’s recommendations come under discussion.

“Energy and Water Minister Silvan Shalom is forming his opinion on the use of natural gas and will soon present it to the government for a decision,” Barak Seri, a spokesman for Shalom, said today in text message in response to a Bloomberg query.

A cut in export quotas significantly below the panel’s recommendation would probably result in the revenue stream from gas sales being “pushed back by many years” because all of the local demand is already being met the Tamar field, Alper said.

Tamar, estimated to hold 10 trillion cubic feet of natural gas, started production on March 30. Gross contingent resources at the offshore Leviathan site are about 19 trillion cubic feet, a report by consultants Netherland, Sewell & Associates Inc. earlier this month showed.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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