Cabinet approves Tamar-IEC gas contract

The contract's original size was $10-16 billion, including options, but subsequent changes shaved $500 million off the original value.

The economic social cabinet today approved the natural gas supply contact between the Tamar partners and Israel Electric Corporation (IEC) (TASE: ELEC.B22). The approval follows approval of the contract by IEC's board of directors, the Public Utilities Authority (Electricity), the Israel Antitrust Authority, and the Government Companies Authority, and brings to an end the six-month process that began with the signing of the contract in December 2011. The original size of the contract was $10-16 billion, including options, but subsequent changes to the contract by the Public Utilities Authority and the Antitrust Authority shaved $500 million off the original value.

Minister of Energy and Water Resources Uzi Landau welcomed the approval.

Sources inform ''Globes'' that Israel Corporation (TASE: ILCO) has asked the Antitrust Authority for information about the contracts the Tamar partners - Delek Group Ltd. (TASE: DLEKG), Noble Energy Inc. (NYSE: NBL), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Alon Natural Gas Exploration Ltd. (TASE: ALGS) - have signed with independent power producers (IPPs) Dalia Power Energies Ltd. and Adeltech Ltd. IEC could use the information to appeal Antitrust Authority director general David Gilo's decision to grant a restraint of trade exemption for these two contracts, subject to meeting certain conditions.

Three Israel Corp. subsidiaries - IPP OPC Rotem Ltd., Israel Chemicals Ltd. (TASE: ICL), and Oil Refineries Ltd. (TASE:ORL) - and IPP Dorad Energy Ltd., which had signed gas supply contracts with Egypt's East Mediterranean Gas Company (EMG), has not yet signed contracts with the Tamar partners. As a result, they may not receive sufficient gas from Tamar during the period between when Dalia Power's power station comes on line and the pipeline from the Tamar field is widened to boost its capacity.

The current pipeline from Tamar is too narrow to meet the full gas needs of all the IPPs. Dalia Power's power station is due to come on line in 2015, and the widening of the Tamar pipeline is due to be completed around the same time. Gilo validated an arrangement whereby Tamar will supply Israel Corp. and Dorad's full needs until Dalia Power's power station comes on line, and Tamar will make every effort to meet its needs during the interim period.

Published by Globes [online], Israel business news - www.globes-online.com - on July 17, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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