Dalia Power seen ending gas supply agreement with Energean

Energean's drilling ship Stena Drillmax  credit: Yevgeni Malchin, Ministry of Environmental Protection

Because of the delay in production from the Karish reservoir, Dalia Power is seeking to supply all its gas needs from Tamar.

Energean and Dalia Power Energies Ltd., which holds the Dalia Power Station, are about to terminate the agreement between them even before the Karish natural gas reservoir held by Energean starts to produce gas, "Globes" has learned. Under the agreement signed several years ago, Dalia Power Energies undertook to buy 0.8 BCM of gas annually from the third natural gas reservoir to be developed in Israel. As reported in the past, the start of gas production from Karish has been postponed from the original date, and Energean now expects the gas to start flowing in "mid-2022".

In September, Energean announced that because of the delay, two customers had begun compensation proceedings against it. In the case of one customer, compensation was set at $23 million. In the case of the other, it was reported, an arbitration procedure was underway. "Globes' reported in the past that the latter customer was Dalia Power Energies. Its Dalia Power Station is fueled by natural gas and requires 1.2-1.3 BCM of gas annually. Dalia Power Station currently receives gas from the Tamar reservoir. Under the agreement signed with Energean, as soon as the Karish reservoir began production, Dalia Power Station was meant to receive gas from both reservoirs, most of it from Karish - 0.8 BCM annually.

"Globes" has learned that Dalia Power Energies recently approached the natural gas partnerships that own the Tamar rights to examine the possibility of continuing to fill all its gas needs from Tamat. It now looks as though the negotiations will culminate in a new contract, under which Dalia Power Energies will continue to receive gas from Tamar exclusively until 2034.

In its announcement in September concerning the arbitration procedure, Energean stated that "the agreement could be terminated", but added "The company has identified and is considering a number of alternatives for these quantities of natural gas, in the local and international markets. Energean has signed eighteen gas sales agreements for the supply of 7.24 BCM annually to the Israeli market, representing close to 100% of the total gas reserve."

Published by Globes, Israel business news - en.globes.co.il - on November 22, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.

Energean's drilling ship Stena Drillmax  credit: Yevgeni Malchin, Ministry of Environmental Protection
Energean's drilling ship Stena Drillmax credit: Yevgeni Malchin, Ministry of Environmental Protection
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