Senior Delek Group Ltd. (TASE: DLEKG) and Noble Energy managers flew to Egypt yesterday to tie up the last loose ends in the deal for exporting gas from the Tamar field to Egyptian company Dolphinus Holdings. The Delek and Noble Energy representatives also discussed the possibility of exporting gas from the Aphrodite field in Cyprus to Egypt. The question now is which field will supply gas to Egypt first, Aphrodite, or Leviathan, also controlled by Delek and Noble Energy?
Last October, the partners in the Israeli Tamar gas field signed a non-binding memorandum of understanding for the export of up to 2.5 BCM (billion cubic meters) of surplus natural gas annually from Israel to private Egyptian industrial customers, via Dolphinus Holdings. The partners undertook to supply a minimum of five BCM over three years.
The parties' intention is that the gas should be transported via Israel Natural Gas Lines pipelines to Ashkelon, and from there to Egypt via the EMG (East Mediterranean Gas Company) pipeline that formerly served to transport gas from Egypt to Israel. The pipeline is constructed to transport gas in one direction only, but it is estimated that it can be converted to be bi-directional at an investment of some $10 million.
The Aphrodite field is 70% owned by Noble Energy and 30% owned by Delek. It holds 100 BCM of gas, and is the only reserve discovered in Cyprus. The amount of gas it contains does not justify developing it and exporting the gas as liquid natural gas, nor is development for consumption in the local Cypriot market justified, since Cyprus will consume only about one BCM annually.
Senior officials from Cyprus and Egypt have therefore been discussing in recent months the possibility of exporting gas from Cyprus to Egypt via a pipeline. A double infrastructure for the reserve (located 170 kilometers south of Cyprus) for Egypt and for Cyprus would be in the interests of both countries, which are seeking cheap energy.
In the light of the decision by Antitrust Commissioner David Gilo to retract the consent decree agreed with the Leviathan partners and to regard them as a monopoly in the Israeli gas market because of their ownership of both the Leviathan and Tamar reserves, and the consequent possibility that development of the Leviathan reserve will be delayed, together with Egypt's need for cheap energy, it could be that the Aphrodite reserve will be developed before Leviathan, and that Egypt will import gas from Cyprus before it imports it from Leviathan.
Published by Globes [online], Israel business news - www.globes-online.com - on February 2, 2015
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