Israel Electric Corporation (IEC) (TASE: ELEC.B22) head of fuel procurement Shimshon Brookman today said that the Public Utilities Authority (Electricity) is advising the utility to immediately reduce the natural gas it buys from Yam Tethys, because of uncertainty about when gas will begin to flow from the Tamar well. He made the comment to a session of the Knesset Interior and Environmental Affairs Committee, which was discussing the construction of the LNG terminal for Tamar.
Yitzhak Tshuva-controlled Delek Group Ltd. (TASE: DLEKG) and Noble Energy Inc. (NYSE: NBL) are partners in both Yam Tethys and Tamar.
Yam Tethys currently provides two-thirds of IEC's natural gas from its field offshore from Ashkelon. The gas reserves are emptying, with output expected to gradually fall until 2014. IEC buys the rest of its gas from Egypt's East Mediterranean Gas Company (EMG), in which Yosef Maiman is a partner. Gas from Tamar is due to begin flowing by 2013.
Brookman said that the Public Utilities Authority's order was intended "to ensure that we won't face a shortage because of the contretemps around Tamar. Beginning tomorrow, we'll buy less Israeli gas for the simple reason that otherwise we'll face a shortage in 2012, and there's concern that we'll have to use heavy industrial oil and diesel in quantities that the country can't cope with."
Brookman added, "In the past three months, there's been a real shortage of gas from Egypt. The Egyptians have gas reserves, but there's a production problem. Egyptian gas is very desirable, but sometimes we open the tap and nothing comes. Israel gas ticks like a Swiss watch, which is why we don’t expect the Sword of Damocles not to fall."
Delek Group's share price rose 2.4% today to NIS 839.90, but the shares of the two subsidiaries that directly own Yam Tethys and Tamar, Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) fell 1.6% to NIS 1.67 and 1.1% to NIS 9.72, respectively.
Published by Globes [online], Israel business news - www.globes-online.com - on July 5, 2010
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