05.07.2009

Largest oil refinery in Israel, situated in Haifa. The Company has a maximum crude oil refining capacity of approximately 24,800 tons per day (180,000 barrels per day). Over 75% of the Company’s produce goes to local consumption, while the balance is exported, primarily to the Mediterranean basin.

Until 2006 the Oil Refineries (ORL) was a monopoly in the refining of crude oil and the manufacturing of fuel products, and was owned by the state (74%) and Israel corp (26%). In September 2006, the government purchased Israel corp’s share in order to split up and privatize the company. The Ashdod refinery was sold to Paz for 3.25 billion shekels and became the Ashdod Oil Refinery (Baza).

The Haifa refinery was privatized in two stages: first, 44% of the shares were sold to institutional investors and 46% were sold to the Ofer-Federman group; second, Haifa Oil Refinery (Bazan) shares were issued on the TASE. The sale reflected a market cap of 6.25 billion shekels.
During 2007 Israel Corp acquired the controlling interest in ORL for $706 million.

OPEC often debates whether to cut its oil quotas in order to increase prices. >OPEC President Chakib Khelil acknowledged the cartel has little control over prices at the moment because of the slumping world economy, which has considerably reduced demand for oil. He pointed out that cartel countries only produce 40 per cent of the world’s oil. >

Surplus of crude oil and/or gas due to either falling demand or additional sources. In September 2008 OPEC’s president Chakib Khelil said the group was worried about a glut in oil

The first oil embargo began on June 6 1967 as a result of the Six Day War. A number of Middle Eastern countries decided to limit their oil shipments to the West, but these were soon replaced by others such as Iran and Venezuela that jumped on the opportunity to increase their supplies. During the 1973 Yom Kippur War the Arab Nations declared an oil embargo. This caused a severe price increase. The price of a barrel of oil increased from $3 on the eve of the war to $5 within a year and then increased to $12 and eventually to $30 by 1980. In 1973 Israel was willing to pay $17 a barrel as long as supplies continued to flow. President Nixon’s refusal to stop supplying Israel with arms and Holland’s support of Israel led to a total embargo by OPEC to these two countries.

In the oil sector, there are large oil companies operating known as the majors, independent companies known as IOC and state oil companies known as NOC

The term “majors” on its own is used to denote the large global oil and gas companies. Supermajors is used to denote the largest of them. The majors include ENI, while some of the supermajors include Aramco, NIOC, ExxonMobil, Gazprom, BP, Royal Dutch Shell, Chevron, ConocoPhillips, Total and others.

Smaller companies are referred to as midcaps, juniors, small oilcos.

The drilling mechanism used for drilling into the sea floor is much the same as can be found on an onshore rig. However, while with onshore drilling the ground provides a platform from which to drill, at sea an artificial drilling platform must be constructed. Drilling offshore dates back to 1869, when one of the first patents was granted to T.F. Rowland for his offshore drilling rig design. It wasn’t until after 1947 that the first offshore well was drilled in the Gulf of Mexico.