Energy Ministry, Tamar partners in pipeline dispute

The Energy Ministry wants the Tamar gas field partners to build a second pipeline from the production platform offshore from Ashkelon to a new onshore terminal.

A serious dispute has broken out over the Ministry of Energy and Water Resources' plan to require the Tamar gas field partners to pay to build a second pipeline from the production platform offshore from Ashkelon to the new terminal which will be built onshore. The government is expected to require Tamar's 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) - to lay the second pipeline, in addition to their proposal to increase the capacity of the current pipeline.

Sources inform ''Globes'' that a last-minute government decision was added to the paragraph which states that, at the same time that the companies lay the pipeline by December 31, 2016, they will complete the work to expand the current pipeline's capacity by July 1, 2015. Sources close to Tamar's partners warned that the economy will face gas shortages if the government insists on the pipeline, because they have no intention of carrying out the two projects simultaneously.

The draft government gas exports decision states in the first paragraph that the Tamar partners will connect the gas field by a second onshore terminal at Ashkelon by December 31, 2016. The subject is a bone of contention between the companies and the Natural Gas Authority. The companies opposes the pipeline on the grounds that it expensive and inefficient, because the additional quantity of gas deliveries will be small because of the limited capacity of the pipeline from the Tamar wellhead to the production platform.

Instead of a second pipeline from the production platform, which cost $250-350 million, the companies propose installing compressors to boost the current pipeline's capacity, and to use the depleted Mari B field, owned by Noble Energy and Delek's Yam Tethys, as an operational storage reservoir. The companies say that this is a much cheaper solution, which can be completed far more quickly because it does not require approvals from planning and building commissions.

Published by Globes [online], Israel business news - - on June 23, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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