The Israel Electric Corporation (IEC) and Eastern Mediterranean Gas (EMG) have initialed a $2.5 billion commercial agreement, under which EMG will supply IEC with 1.7 billion cubic meters (BCM) of natural gas over fifteen years.
The deal includes a five-year extension option, and is expected to save IEC $300 million per year, or $4.5 billion over the contract period. The agreement requires approval by the IEC and EMG boards of directors. IEC said that the agreement would be brought up for approval in July.
An IEC spokesperson said in response that the agreement had great strategic importance for both the natural gas industry and Israel. IEC has already signed an agreement with Yam Thetis for supply of gas from one well.
The agreement with Egypt, which has enormous quantities of gas, guarantees IEC and Israel a continuous supply of gas. The price of gas in the deal is considered extremely low.
The deal was signed in EMG’s offices in Cairo, in the presence of IEC’s senior negotiating team, IEC president and CEO Jacob Razon, and EMG partners Egyptian businessman Hussein Salem and Joseph (Yossi) Maiman, and Merhav Group VP Dr. Nimrod Novick. Israeli Minister of National Infrastructures Benjamin Ben-Eliezer reported the signing, and praised the agreement, saying it heralded a new era in Israel’s energy industry.
Two weeks ago, Ben-Eliezer and his Egyptian counterpart signed a diplomatic agreement in support of the IEC-EMG contract and future agreements to be signed by EMG with other Israeli customers.
Published by Globes [online] - www.globes.co.il - on July 14, 2005