3 Israeli cos buying gas from Karish, Tanin reservoirs

gas rig  picture: thinkstock

Israel Chemicals, Oil Refineries, and OPC will buy 39 BCM over 15 years.

Israel Chemicals (TASE: ICL: NYSE: ICL), Oil Refineries Ltd. (TASE:ORL), and OPC Energy Ltd. (TASE:OPCE), all Idan Ofer-controlled companies, have signed an agreement with Greek company Energean to buy natural gas from the Karish and Tanin reservoirs. The deal includes the supply of 39 BCM of gas over 15 years to the companies: 17 BCM to Oil Refineries, 13 BCM to Israel Chemicals, and 9 BCM to OPC Mishor Rotem. The deal also includes an 18-year extension option.

The price for the deal is believed to total $5.7 billion. Energean estimates that gas will begin flowing from its two reservoirs in 2020. The average price for the deal is about $4.10 per million Btu, 20% lower than the price in the agreements signed for gas from the Leviathan reservoir and 30% lower than the price that Israel Electric Corporation (IEC) (TASE: ELEC.B22) is paying from gas from the Tamar reservoir.

The three companies negotiated jointly with Energean in order to leverage their purchasing power to obtain better terms. At the same time, now that the negotiations have been concluded, each of the companies in the group has a separate agreement that is independent of the agreements with the others.

The new agreements come on top of earlier agreements signed by Energean to supply 33 BCM for $3 billion. A month ago, the company signed three agreements to sell natural gas to three private electricity producers: Dorad, Ramat Negev Energy, and Ashdod Energy from the Edeltech group. Energean also has a signed agreement to supply gas to the Dalia Energies power station.

Energean, which acquired the Karish and Tanin gas reservoirs after the government approved Israel's natural gas plan, is competing with the Leviathan and Tamar reservoirs owned by Delek Group Ltd. (TASE: DLEKG) and Noble Energy.

Published by Globes [online], Israel Business News - www.globes-online.com - on December 7, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

gas rig  picture: thinkstock
gas rig picture: thinkstock
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