Israel Gives Go-Ahead to Drilling on Golan Heights

Israel said Thursday that it has awarded the first license to drill for oil in the disputed Golan Heights to a local subsidiary of U.S.-listed explorer Genie Energy Ltd.

Genie Israel Oil and Gas Ltd. has been granted exclusive rights to drill in an area of about 397 square kilometers, or about one-third of the Golan Heights total area, the Energy Ministry said.

In recent months, there have been several incidents of artillery fire from the civil war in Syria spilling into the Golan region, which has been an internationally patrolled demilitarized zone since the end of the 1973 Yom Kippur War. Israel first occupied Golan during the 1967 six-day war, and annexed it in 1981. The U.S. government has previously called on Israel to rescind the latter move, saying it has "no validity" and is "a stumbling block in the way of achieving a just, comprehensive, and lasting peace in the region."

A spokesman for Israeli Energy Minister Uzi Landau declined to comment on how the political situation in Syria, or what many consider the occupied nature of the Golan Heights, could affect the project. The U.S. State Department didn't immediately offer comment.

"I can tell you that the process [for granting the license] was all professional and was made by the oil and gas council in the office," the Israeli spokesman told Dow Jones Newswires.

Genie said in a statement that preliminary tests show that the newly-licensed area likely contains "significant quantities of conventional oil and gas in relatively tight formations, the development of which would entail significantly different technical approaches and project time lines than other projects."

Significant quantities of natural gas have been found in recent years off Israel's coast, including at the giant Leviathan field, potentially setting up Israel as an exporter of energy.

The news wasn't enough to lift the Tel Aviv Stock Exchange, which was trading negatively Thursday.

Newark, N.J.-based Genie is also working on developing two oil shale projects, one in California and one in Israel, near Jerusalem.

Former U.S. vice president Dick Cheney sits on the advisory board of Genie Oil and Gas, as does Rupert Murdoch, chairman and chief executive of News Corp., parent company of Dow Jones Newswires and The Wall Street Journal.