An Israeli exploration group said it would return its licenses to develop the Daniel natural gas field off Israel's Mediterranean coast to the government, citing a number of factors including a lack of investors, on Aug. 20.

Returning the license to all rights to develop the fields could be a significant blow to Israel, which is seeking to become energy-independent and an exporter while developing competition in its existing gas sector.

A resource report showed there could be an estimated total of 8.9 trillion cubic feet of natural gas at the Daniel East and West fields, a group led by Isramco Negev and Modiin Energy said in 2016.

Its decision to give up its rights was based, among other things, "on assessments regarding the level of geological risk in the licenses, the difficulties expected in commercializing the gas, if and when it is discovered, and the lack of interest by new investors," it said on Aug. 20.

The licenses expire in April 2018, seven years after they were granted and may not be extended, it added in a statement to the Tel Aviv Stock Exchange. At the same time, the group does not have the resources to raise its portion.

Isramco holds 65% of the licenses while Modiin owns 15%. Isramco also has a stake in a nearby gas field of similar size called Tamar.

The government has been under pressure from regulators, lawmakers and the public to open the sector to competition. Up to now, the sector has been dominated by a partnership of Noble Energy (NYSE: NBL) and Delek Group, which controls both Tamar and the much larger Leviathan fields.

Experts estimate there are between 10,000 billion cubic meters (Bcm) to 15,000 Bcm of gas in the eastern Mediterranean basin that includes Israel, Egypt and Cyprus, enough to supply domestic needs as well as Europe, Energy Minister Yuval Steinitz said.

Offshore