On December 15, 2008, Zion Oil & Gas Inc. (the "Company") and Aladdin Middle East Ltd. ("AME"), a Delaware corporation with offices in Wichita, Kansas and in Ankara, Turkey, amended the drilling contract that they executed on September 12, 2008 pursuant to which AME will arrange for the transportation into Israel of its 2,000 horsepower rig to be used to conduct the drilling contemplated by the Company's business plan. Pursuant to the amendment, the Company will purchase drill pipe, to be used in its planned drilling, at a cost of $1,135,000. AME has agreed that the amounts expended by the Company for the drill pipe will be offset against: (a) amounts that the Company will need to pay to AME under the drilling contract and (b) $200,000 that the Company was to pay AME in respect of the final balance due for mobilization costs related to the rig. Zion's 'early payment' opportunity costs will be met by a $ 125,000 reduction in the amount of the letter of credit (LOC) that the Company is required to issue in support of the rig demobilization. Consequently, the amount of the demobilization LOC will be reduced from $675,000 to $550,000. If the full cost of the drill pipe is not recovered by the Company from the amounts above, then any remaining balance will be recovered from the demobilization fees that the Company may owe to AME at the end of the planned drilling.

The foregoing description of the transaction is only a summary and is qualified in its entirety by reference to the Amendment No. 1 to the International Daywork Drilling Contract-Land attached hereto as Exhibit 10.1 and to Protocol No. 2 attached hereto as Exhibit 10.2, which are incorporated herein by reference.

(a) Financial Statements.

None.

(b) Pro Forma Financial Information.

None.

(d) Exhibits.

Exhibit No.                               Description
10.1           Amendment No. 1 to International Daywork Drilling Contract - Land
               dated as of September 12, 2008 between Zion Oil & Gas, Inc. and
               Aladdin Middle East Ltd.
10.2           Protocol No. 2
99.1           Press Release issued on December 16, 2008