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Israel Corp. signs $4b gas deal with Tamar partners

26 Nov, 2012 9:25
שלח תגובה במיילAmiram Barkat and Chen Maanit

Israel Corp., which will need $10 billion worth of gas for subsidiaries, is Israel's second largest customer of natural gas after IEC.

Israel Corporation (TASE: ILCO) last night signed a $4 billion natural gas purchasing contract with the Tamar partners. The signing will bring to an end a four-year saga, since Israel Corp. signed a gas purchasing contract with Egypt's East Mediterranean Gas Company (EMG), a contract which was subsequently rendered redundant when Egypt suspended all gas deliveries to Israel.

Israel Corp., which will need $10 billion worth of gas, is Israel's second largest customer of natural gas after Israel Electric Corporation (IEC) (TASE: ELEC.B22). Israel Corp.'s pending deal with the Tamar partners - Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Alon Natural Gas Exploration Ltd. (TASE: ALGS) - is for a smaller amount, because the contracts will be for short periods, probably because Israel Corp. believes that more gas suppliers will enter the market, especially Leviathan (owned by Noble Energy, Delek, and Ratio Oil Exploration (1992) LP (TASE:RATI.L)).

Under the agreement, three Israel Corp. subsidiaries - Israel Chemicals Ltd. (TASE: ICL), Oil Refineries Ltd. (TASE:ORL), and independent power producer OPC Rotem Ltd. - will buy 16-20 billion cubic meters (BCM) of gas from the Tamar field over a period of several years. Israel Chemicals will buy 0.3 BCM a year through 2017 for its new power station, which will come on line in 2015; Oil Refineries will by 1 BCM of gas a year in a seven-year contract; and OPC, whose power station will come on line in the second half of 2013, will buy 0.5 BCM of gas a year in a 16-year contract.

In December 2010, Israel Corp. signed a gas delivery contract with EMG, which beat the Tamar partners for the deal, after a bidding process that lasted over a year. Two months later, the fall of President Hosni Mubarak in Egypt, caused disruptions, and ultimately a cessation, in gas deliveries to Israel.

Published by Globes [online], Israel business news - www.globes-online.com - on November 26, 2012

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

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