Sources inform ''Globes'' that Israel Natural Gas Pipelines Company will begin gas deliveries to Israel Chemicals Ltd. (TASE: ICL) unit Dead Sea Works next week. The start of deliveries means that the Israel Corporation (TASE: ILCO) subsidiary is following Israel Electric Corporation (IEC) (TASE: ELEC.B22) in switching to natural gas.
The Natural Gas Pipelines is due complete the pipeline from Mishor Rotem to the company this week, and deliveries will begin next week, unless there is a last-minute hitch. Dead Sea Works will receive 30-50 million cubic feet of natural gas per day. As soon as the plant obtains all necessary permits, it will begin using the gas.
The switch to natural is important for Israel Chemicals; it will slash its energy costs and reduce emissions. The company has estimated the savings at $100 million a year. Dead Sea Works and the magnesium factory are the company's largest energy consumers, and reducing their energy costs will boost the company's profits, which have slid in the past two quarters as demand for potash and fertilizers slumped.
Natural gas supplier Yam Tethys, jointly owned by Yitzhak Tshuva-controlled Delek Group Ltd. (TASE: DLEKG) and Noble Energy Inc. (NYSE: NBL) is another winner; it has a five-year $260-330 million gas delivery contract with Israel Chemicals.
Israel Chemicals will reportedly begin buying natural gas for its other plants beginning in 2014. The company is in talks with the Tamar partners, which includes both Delek Group and Noble Energy, and Egypt's East Mediterranean Gas Company (EMG) on a contract.
In addition to the Dead Sea Works factory at Sdom, the southern section of the national gas pipeline delivers gas to IEC's Ramat Hovav power station, the Ramat Hovav industrial zone, where both Israel Chemicals and Makhteshim Agan Industries Ltd. (TASE: MAIN) have factories, and the Mishor Rotem industrial zone, where Israel Chemicals units Rotem Amfert Negev Ltd. and Industrial Products Division are located.
Natural Gas Pipelines director general Arie Ramot Shiffman said, "The company has completed building the southern section on a tight schedule, while overcoming difficult terrain and complex engineering challenges. The construction should save the Israeli economy tens of millions of shekels a year, and substantially reduce air pollution in the south. We fully cooperated with the Ministry of National Infrastructures and the Natural Gas Authority, which greatly helped us promote the project."
Published by Globes [online], Israel business news - www.globes-online.com - on October 12, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009