The Tamar natural gas field partners - Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L), plus Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and Alon Natural Gas Exploration Ltd. (TASE: ALGS) - today announced that they have signed the final gas supply contract with Israel Electric Corporation (IEC) (TASE: ELEC.B22), including the amendments demanded by the Antitrust Authority and the Public Utilities Authority (Electricity).
The amendments state that IEC's right to exercise its option to increase contractual gas quantities will be divided into two: until April 15, 2013, IEC may exercise its option to increase the contractual amounts that it will consume through the end of 2019; and until April 15, 2015, it may extend the option to increase the contractual amounts that it will consume from the beginning of 2020 through the end of the contract.
The amendments also state that for the 24,000 million BTU per hour of natural gas that IEC will consume under the option, the price rise linkage mechanism will be revised, so that the price that IEC pays for the additional quantities will be calculated at a 30% linkage to the US Consumer Price Index (CPI).
Delek Drilling CEO Yossi Even said, "The Tamar partners' agreement with IEC is very good consumer news for Israel's people, and is a centerpiece for the entry of Israel's energy market into the natural gas era. Delek Drilling and Avner will continue the rapid development of the Tamar discovery, which is due to begin supplying natural gas to Israel in April 2013, along with the development of other discoveries, including Leviathan, and the continuation of exploration activity."
Avner CEO and Delek Drilling chairman Gideon Tadmor said, "This morning, we signed the largest agreement ever signed in Israel. This agreement is not only historic, but it also proves that we did the right thing for both parties and for the good of the Israeli economy. Immediately after the Tamar discovery, the Tamar partners and IEC began the negotiations, which led to today's signing ceremony on a 15-year gas supply agreement. This agreement enables the Tamar partners to finance development of the field, which will promise gas supplies to the entire economy, in large quantities and at a short timetable. The signing of the this agreement consolidates the future of Israel's natural gas market, the severing of the electricity market from oil, and the supply of clean and cheap power to the Israeli people."
Delek Group's share price rose 1.5% by midday today to NIS 527.80, giving a market cap of NIS 6 billion, Avner's share price rose 1% to NIS 1.87, giving a market cap of NIS 6.2 billion, Delek Drilling's share price rose 1.3% to NIS 10.55, giving a market cap of NIS 5.7 billion, Isramco's share price rose 0.4% to NIS 0.46, giving a market cap of NIS 6 billion, and Alon Gas's share price rose 4.4% to NIS 37, giving a market cap of NIS 515 million.
Published by Globes [online], Israel business news - www.globes-online.com - on July 22, 2012
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