Energean Oil and Gas plc (LSE: ENOG, TASE: ENOG), which owns the Karish and Tanin natural gas reservoirs in Israeli waters, has announced that Energean Israel will supply gas to MRC Alon Tavor Ltd.'s power plant. The contract is for the supply of 0.5 Bcm annually, or up to 8 Bcm over a fifteen year term. Energean estimates the deal to be worth $1 billion. The agreement is linked to the Israeli Electricity Production Index and has floor pricing and take-or-pay provisions. It is subject to the acquisition of the Alon Tavor plant by MRC being completed.
The MRC consortium bought the Alon Tavor plant from Israel Electric Corporation in July for NIS 1.9 billion. The consortium consists of Chinese Harbor, Rapac Communication and Infrastructure Ltd. (TASE: RPAC) unit Rapac Energy, and Mivtach Shamir Holdings Ltd. (TASE:MISH), and infrastructures fund Generation Capital. The sale was in the framework of Israel Electric Corporation's undertaking to sell five power plants at the rate of one a year.
The Alon Tavor site currently operates as a combined cycle plant with an output of 380 megawatt hours (MwH). The contract with Energean is for gas for the production of 363 MwH. Once the deal is completed, MRC will be able to expand the exsiting power plant to 430 MwH, and to construct an additional, 230 MwH plant to sell power at peak times.
Energean now has firm agreements for the supply of 5.0 Bcm annually of gas into the Israeli domestic market, excluding the contingent agreements that have been signed with I.P.M Beer Tuvia (0.4 Bcm/year) and Or Power Energies (0.7 Bcm/year).
Published by Globes, Israel business news - en.globes.co.il - on November 21, 2019
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