Tamar gas field development to cost $2-3 billion

Capital market sources estimate over $40 billion revenue over 20 years.

Noble Energy, one of the firms in the partnership that is drilling in the offshore Tamar and Dalit concessions, estimates that the cost to develop the two fields will reach $2-3 billion. The sum was given on a notice by another partner, Delek Group Ltd. (TASE: DLEKG) subsidiary Delek Drilling Limited Partnership (TASE: DEDR.L), to the Tel Aviv Stock Exchange (TASE) regarding its upcoming January 27th shareholder meeting.

Until now, $274 million has been invested in buying the licenses, the equipment, services. Delek Drilling estimates that another $230 million in equipment and services will be needed to develop the projects, and that according to Noble Energy's estimate, the overall cost of development can reach a range of $2-3 billion.

The partnership plans to complete the development by 2012, and to begin extracting gas from the reservoir discovered earlier this year.

Noble Energy owns 36% of the Tamar prospect, Delek Group subsidiaries Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L) each own 15.625%%, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) owns 28.75% and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Alon Energy Exploration Ltd. owns 4%.

Noble Energy's estimate is not that far off from that of Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), reported in a shelf prospectus several months ago, which estimated costs of $1.5-3 billion.

Capital market sources estimate the costs to reach $2-2.5 billion, alongside expected revenue of over $40 billion over the next 20 years.

Leader Capital Markets analyst Yoav Burgan said, "On the basis of these costs, it is possible to talk about a project value of $6.5-8 billion. These figures should not surprise the market."

At the same time, Yitzhak Tshuva-controlled Delek Group continues to deepen its holding in the natural gas exploration sector. Yesterday, it bought NIS 15 million of units in the Delek Drilling and Avner Oil and Gas limited partnerships. Delek Group now owns 12.94% of Avner, and 6.79% of Delek Drilling.

Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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