Trading was suspended in the shares of the Leviathan partners today, after they announced that a huge deal for the sale of natural gas to Jordan worth an estimated $10 billion had been signed.
Under the terms of the agreement, the marketing firm owned by the Leviathan partners, NBL Jordan Marketing, will provide Jordan's National Electric Power Company (NEPCO) with 45 billion cubic meters (BCM) of natural gas over 15 years. According to the export agreement, supply is to commence once gas from Leviathan is flowing and the pipelines to convey the natural gas between Israel and Jordan are laid. This deal is for one tenth of the gas in the Leviathan field.
The agreement is linked to the price of a barrel of Brent crude and includes a lower threshold and a conveyance fee. The Leviathan partners estimate that the cumulative revenue from natural gas sale to NEPCO may reach $10 billion, assuming that the Jordanian company consumes the overall volume stipulated in the contract; this sum is based on estimates made by the partners regarding the price of natural gas during the term of the agreement. Actual revenue will be affected by various factors, including the volume of gas NEPCO actually buys and Brent prices during the period of the contract.
The Leviathan partners are Noble Energy Inc. (NYSE: NBL) (39.66%), Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) (22.67% each) and Ratio Oil Exploration (1992) LP (TASE:RATI.L) (15%).sale.
Noble Energy Senior Vice President Eastern Mediterranean J. Keith Elliott said, "We look forward to supplying natural gas resources for energy and economic development to the people of Jordan. This first export GSPA for Leviathan further underpins the volumes supporting project sanction. Including Israel sales contracts, this brings total contracted volumes to between 400 MMcf/d and 450 MMcf/d. The approved Plan of Development incorporates an expandable platform, which will enable us to accelerate Leviathan first gas while maintaining the ability to increase production capacity to meet growing future demand. While continuing to advance negotiations with additional Israeli industrial and power companies and other regional customers, we are also progressing the other work streams necessary for a Final Investment Decision as early as the end of 2016."
Noble Energy Israel Country Manager Bini Zomer, "Noble Energy and our partners have continued to move the Leviathan project forward. The signing of this contract is historic in terms of what it means for the development of the oil and gas industry in Israel, the positive impact it will have on our economy, environment and energy security and, more importantly, the positive impact this industry in general, and Leviathan in particular, will have on our relationship with our neighbors. Noble Energy is proud to be a partner with the state of Israel and its citizens in the development of this industry and looks forward to enhancing these benefits through growing the domestic market and expanding exports to neighboring countries."
Published by Globes [online], Israel business news - www.globes-online.com - on September 26, 2016
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