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Israel's Tamar signs two Mediterranean gas deals for $1.2 billion

Group developing fields off coast will supply natural gas to Israeli power plants, as Jewish state looks for alternative to Egyptian supplies

Reuter, Tuesday 10 Jan 2012
Views: 925
Views: 925

A group developing the Tamar field off Israel's Mediterranean coast said on Tuesday it had signed deals to sell up to 0.33 billion cubic meters (bcm) of natural gas annually for 16 years for the operation of two power plants.

The partners in Tamar said in a statement to the Tel Aviv Stock Exchange the revenue from the contracts to Ramat Negev Energy Ltd and Ashdod Energy Ltd would total about US$1.2 billion, based on estimates for the price of gas during the period.

Israeli companies had been expected to buy natural gas from Tamar and Egypt but Egyptian gas supplies have become unreliable after the pipeline to Israel has been blown up by militants 10 times in the past year, leading to supply disruptions.

Ramat Negev and Ashdod Energy are units of Israel's Edeltech Group (58 per cent) and Turkey's Zorlu Enerji Elektrik Uretim A.S. (42 per cent).

The deals are subject to the companies closing the necessary financing as well as various regulatory and other approvals.

The partners expect to begin supplying gas to Ramat Negev and Ashdod Energy in the second half of 2014.

Ramat Negev is developing a combined cycle cogeneration plant that will generate 120 MW of electricity plus 110 ton per hour of process steam, mainly for Makhteshim Chemical Works Ltd. Ashdod Energy is building a similar plant that will generate 55 MW of electricity and 40 tonnes an hour of process steam for the Agan Chemicals plant.

On Monday, the partners in Tamar reached an agreement to sell Dalia Power up to 1.38 billion bcm of natural gas annually for up to 17 years. Revenue from the deal is projected at about $5 billion.

Last month Israel's state-owned electric utility Israel Electric Corp agreed to buy natural gas worth $8 billion from the partners in Tamar.

That deal was for an estimated 3 bcm of gas a year for 15 years starting in mid-2013.

A group led by Texas-based Noble Energy is developing the Tamar prospect, which contains an estimated 9.1 trillion cubic feet of gas. A nearby site, Leviathan, is nearly twice as large and due to be online around 2017.

Noble holds 36 per cent of Tamar. Isramco Negev owns 28.75 per cent, Avner Oil Exploration and Delek Drilling hold 15.625 per cent each and Dor Gas Exploration has a 4 per cent stake.

Delek Drilling and Avner are both part of the Delek Group conglomerate.

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