According to the Petroleum Law-1952, oil and gas exploration activities in Israel can be carried out in those geographic areas in which an exploratory entity has been given an oil and gas right according to the Petroleum Law. In addition, the Natural Gas Sector law mainly deals with the transmission, distribution and marketing of natural gas in Israel. Exploration and production in Israel is controlled by the Petroleum Law 1952 and the regulations dated 1953 and 2006 which defines three rights: (1) Preliminary Permit – the owner of which may request a priority right which gives exclusive exploration rights on the area. A permit may be granted for a period not exceeding 18 months; (2) License – after that the licensee selects a block or a number of blocks on his licensed area (drilling prospect) where he will ask to focus his drilling activities and needs to release 40% of the area back to the state. The license is granted based on the presentation of a work program and proof of financial capacity, namely the ability to finance half of drilling costs which is about $70 million for an offshore drilling; if oil has been discovered in commercial quantities and commerciality has been proven a license must be obtained prior to drilling. The license is granted initially for a period of 3 years and can be extended for up to 4 more years (thus a total of 7 years); (3) Lease – at the end of the license period, the licensee is obliged to start drilling or failing this his license will be revoked. A Lease is granted to the license holder. If this is the case the license holder is granted a development lease for 30 years that can be extended by an additional 20 years, during which time the leaseholder is obliged to develop the field with all due diligence as a prudent operator. The lease maximum period is 50 years. The royalty paid for oil and gas is 12.5%.

A request for a drilling license must be done according to clause 15 of the Petroleum Law 1952 and clause 1 of the Petroleum Regulations and the 2006 Petroleum Drilling Regulations. The entity requesting the right must include a list of the coordinates on the new Israeli grid and provide a map of the requested area, provide a description of the geophysical/geological backward of the request, provide a workplan with a detailed timetable of the operations to be carried out in stages, provide an estimate of the cost of the operations, details of the professional background of the scientific consulting team and proof of the financial capacity available. In any case it is necessary to show the availability of at least one million dollars. Documents attesting to proof of the availability of funds are to be submitted in the original. The following are the general requirements needed for the different rights: (1) preliminary permit onshore – full financial capacity for the entire work program to be proved; (2) onshore license – 50% of the cost of carrying out the work program (including one drilling); (3) offshore preliminary permit – full financial capacity for the entire work program plus 50% of the cost of drilling; (4) offshore license – 50% of the cost of drilling.