Greek company Energean Oil and Gas has signed agreements to supply natural gas from the Karish and Tanin offshore fields to Edeltech Group subsidiaries Ramat Negev Energy and Ashdod Energy, the company announced today. Under the agreements, the companies will buy 2.65 BCM of gas for at least 14 years.
The average price in the deal is $4 per heating unit, at least 20% less than the prices agreed in the agreements for supplying gas from the Leviathan reservoir. The new agreements were signed yesterday, following the signing of an agreement to supply gas to private electricity producer Dorad.
Energean bought the Karish and Tanin reservoirs as part of the terms of the gas agreement between the Israeli government and the owners of the Leviathan and Tamar reservoirs, Delek Group Ltd. (TASE: DLEKG) and Noble Energy, and is in competition with those reservoirs. The agreement with Dorad brings Energean closer to the critical mass that with enable it to obtain financial closing by the end of the year, which in turn will enable it to start developing the Karish and Tanin reservoirs and have the gas flowing by 2020, in accordance with the development agreement it signed in August with Israel's Ministry of National Infrastructures, Energy and Water Resources..
The Greek company now has signed agreements to supply 0.6-0.7 BCM of gas annually to private electricity producer Dalia Energies, 0.4 BCM annually to Dorad, and 0.2 BCM annually to Edeltech. The Idan Ofer group is still negotiating with Energean to buy 2.6 BCM annually for three Ofer group companies: Oil Refineries Ltd. (TASE:ORL), Israel Chemicals (TASE: ICL: NYSE: ICL), and private electricity producer OPC Energy Ltd. (TASE:OPCE).
Energean chairman and CEO Mathios Rigas said, "Energean has signed agreements with Dalia, Dorad, and Edeltech to date amounting to a total of 33 BCM, reflecting $3 billion in guaranteed revenue, and supported by a take or pay arrangement for a minimum annual quantity. We are continuing to close the agreements needed as planned, and are continually acting to obtain the required milestones in order to reach a final investment decision (FID)."
Ramat Negev Energy and Ashdod Energy supply electricity and steam to plants, as well as industrial services. Ramat Negev Energy generates 125 megawatts on the Adama Makhteshim site in Neot Hovav, and Ashdod Energy generates 65 megawatts on the Adama Agan site in the Ashdod industrial zone.
Ramat Negev Energy and Ashdod Energy said, "The gas agreements signed today make it possible to diversify the sources of natural gas for projects, and contribute the companies' business model."
Published by Globes [online], Israel Business News - www.globes-online.com - on October 31, 2017
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