Turkey's Zorlu seeks Leviathan gas

Zorlu wants to buy 3 billion cubic meters of natural gas a year from Leviathan.

Turkish conglomerate Zorlu is in talks to buy natural gas from Leviathan. Zorlu Energy CEO Ibrahim Sinan Ak, said for the first time on Friday, that the company was interested in buying 3 billion cubic meters of natural gas a year from the Israeli gas field under a 15-year contract.

Media reports say that the gas purchases would be part of a project to lay a pipeline from the Leviathan field to Turkey, at a cost of $2.5 billion. JPMorgan says that a pipeline from Leviathan to Turkey would have a higher return on equity than construction of a liquefied natural gas (LNG) plant, and that the payback period would be less than four years.

The choice of projects could have a major effect on the future of the pending deal between Leviathan's partners and Woodside Petroleum Ltd. (ASX: WPL). The Australian company, which has offered $1.25 billion for 30% of the rights to Leviathan, specializes in building LNG plants, and its customers are in East Asia. For Woodside, there is no special added value in a pipeline to Turkey.

Ak spoke at the European Energy Summit in Istanbul. Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L) chairman Gideon Tadmor, who also attended, said that there was no reason that Israeli gas should not begin flowing to Turkey by 2017. "For this to happen, we must speed up the negotiations on the development plans and obtain support from both governments," he said.

There have been reports that Zorlu is a partner in several of the consortia which have expressed an interest in laying a pipeline from the Leviathan gas field to the company's customers in Turkey.

Zorlu, one of Turkey's largest companies, owns 25% of Dorad Energy Ltd., which will become Israel's largest independent power station, as well as stakes in two smaller power stations under construction adjacent to Makhteshim Agan Industries' plants at Ramat Hovav and in Ashdod.

Published by Globes [online], Israel business news - www.globes-online.com - on November 3, 2013

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

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