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  • Monday ,20 October 2014

Israeli partners sign bid to sell natural gas to Egyptian firm


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Monday ,20 October 2014

Israeli partners sign bid to sell natural gas to Egyptian firm

Turning the tables on the region's natural resource flow, Israeli gas may soon surge southward through the Egyptian pipeline that for several years provided gas to Israel – but fell victim to saboteurs in the Sinai region. 

The developers of the 282-billion cubic meter Tamar reservoir, which has been supplying gas to Israelis since March 2013, have signed a letter of intent to sell 2.5 b.cu.m. annually to the Egyptian firm Dolphinus Holdings Limited, the Delek Group reported to the Tel Aviv Stock Exchange on Sunday morning. This gas surplus sold to the Egyptian firm from Israel's local supply will begin serving private industrial consumers already in 2015, according to the partners.
The move will revitalize Egypt's East Mediterranean Gas Company pipeline that for several years carried gas from Egypt to Israel. In 2008, EMG began supplying Israel with about 40 percent of its natural gas provisions, until saboteurs began thwarting the flow through Sinai pipeline explosions. Following 14 months of such attacks, the Egyptian government formally terminated the agreement between EMG and Israel in April 2012.
At Tamar, located about 80 km. west of Haifa, Noble Energy holds 36% of the basin. Delek Drilling and Avner Oil Exploration each own 15.625%, while Isramco owns 28.75% and Dor Gas owns 4%.
The neighboring 621-billion cubic meter Leviathan gas reservoir, about 130 km. west of Haifa, is expected to begin flowing in 2017. Noble Energy owns 39.66% of Leviathan, while Delek Drilling and Avner Oil – both subsidiaries of the Delek Group – each own 22.67% and Ratio Oil Exploration holds 15%.
The realization of the project will help maximize the production capabilities from the Tamar reservoir, and will strengthen the Israeli economy by increasing tax and royalty revenues, said Delek Drilling CEO Yossi Abu.
Sunday's announcement joins a number of other regional agreements and understandings that the Tamar and Leviathan partners have signed with Israel's neighbors.
In September, the Leviathan reservoir partners signed a letter of intent to sell 45 billion cubic meters of natural gas to Jordan’s National Electric Power Company over a 15-year period.
Empty liquefaction plants in Egypt have also become an attractive option for Israeli gas. The British Gas Group signed a letter of intent with the Leviathan partners for the 15-year supply of 105 b.cu.m. of natural gas to its Idku plant. Meanwhile, in early May, the Tamar reservoir partners signed a letter of intent with Spanish firm Union Fenosa, for the provision of 71 b.cu.m. to that firm’s liquefaction facility in Damietta.
In January, the Leviathan partners signed their first export deal – a $1.2b. sales agreement with the Palestine Power Generation Company. According to the agreement, PPGC is set to buy around 4.75 b.cu.m. of gas over 20 years, to fuel a future 200-megawatt power plant in Jenin.
A month later, the Tamar reservoir partners signed a $500 million deal to provide 1.8 b.cu.m. of gas to the Jordanian firms Arab Potash and Jordan Bromine, to power their Dead Sea facilities for the next 15 years, beginning in 2016.
As far as Sunday's letter of intent signed with Dolphinus is concerned, this latest deal is "another important link in a sequence of agreements that will enable the supply of natural gas to the domestic market in Egypt," said chairman of Delek Drilling and CEO of Avner Oil Exploration Gideon Tadmor.
"I have no doubt that these are agreements that will strengthen the relations between Israel and its neighbors," Tadmor added.