Lior Pick, Adv. (CPA) and Anna Liskanich, Adv.

As a rule, searching for oil is an activity on land that has to be performed in accordance with the Planning and Building Law, 5724-1965 (hereinafter: “the Planning and Building Law“).

Section 47 of the Petroleum Law, 5717-1952 (hereinafter: “the Petroleum Law“) authorizes the Minister of Energy and Water, in counsel with the Minister of the Interior, to permit an oil right holder to deviate from the Planning and Building Law. In the end of 2011, the Ministry of Energy announced its intent to regulate such deviations as a part of the discussions revolving the project to produce oil from oil shales. However, the final version of the Regulations applies to all types of searches for oil.

On April 24th, 2012, the Minister of Energy and Water signed regulations that permit deviations from the Planning and Building Law for the purpose of searching for oil. The regulations allow license holders only to submit requests to deviate from the provisions of the Planning and Building Law (hereinafter: “the Request“). However, if the Request was submitted before the regulations come into force the applicant may also be a “possession holder”, not including searches for oil in oil shales. A regional committee, according to the meaning assigned to the term in the Planning and Building Law, with the participation of a representative of the Minister of Energy and Water, will be authorized to decide on such requests.

A deviation from the provisions of the Planning and Building Law will enable, for the purpose of oil drillings and acts associated with them, and among other things, making breakthroughs to access the site, pump oil and pumping by-products, testing and production tests, underground heating, fencing, putting up portable structures to perform the drilling activities, including putting up an office, a laboratory, temporary infrastructure lines required including to supply electricity and water, and more.

The Request will include a verbal description of the drilling and the actions required to perform it, an orientation map for the drilling area and a detailed blueprint of the drilling area. As said, the Request will be discussed by the regional committee in the presence of a representative of the Minister of Energy and Water. In addition, an environmental document will be submitted to the committee and it will be prepared according to the Ministry of Energy and Water’s instructions, in counsel with the Ministry of Environmental Protection. The document will specify the environmental effects of the drilling and the activities derived from it on the environment. Moreover, the document will specify surveys of alternative locations, recommended means to minimize the environmental effects and instructions to rehabilitate the site upon completing the drilling activities. The committee may demand a second opinion from other experts.

The committee will discuss the Request with 45 days of its submission, but no less than 14 days of the day the representative of the Ministry of Environmental Protection’s opinion was forwarded to it. The representative of the Ministry of Environmental Protection must submit an opinion on the environmental document within 30 days. In projects to search for oil from oil shales, the representative must submit an opinion within 90 days, and the committee may extend this period by 90 additional days. Should the committee decide to approve the Request with conditions, the applicant must fulfill the conditions within 60 days and notify the committee.

The authorization for drilling according to the regulations will be valid for up to a year, unless a detailed plan to perform the drilling was submitted to the planning agency. If a plan was submitted as said, the authorization will be valid until the planning agency will decide otherwise. In activities to produce oil from oil shales, the committee may give permission for a period of up to 3 years at the most.

The regulations determine transitional orders regarding requests for oil drillings that were submitted before the regulations came into force. The transitional orders determine a shorter schedule for permitting oil drillings that began the planning procedures before the regulations came into force, so that they will not be harmed by the regulations. The transitional orders do not apply to ventures to search for oil from oil shales.

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This circular is general. Do not use anything stated therein without receiving an opinion and/orprofessional particular legal advice according to unique circumstances.

With best regards,
Lior Pick and Co., Law Firm