Leviathan partners sign $3b gas deal

Leviathan

Leviathan will supply 13 BCM over 18 years to the IPM power plant in Be'er Tuvia.

The partners in the Leviathan natural gas reservoir today announced the signing of a gas supply agreement with the IPM company in Be'er Tuvia. The partnership will supply 13 BCM of gas to the power station slated for construction in the Be'er Tuvia industrial zone. The value of the 18-year agreement is estimated at $3 billion. The contract is the second for the partners, following a contract with Edeltech, owned by the Edelsberg family, last January.

The IPM power station is controlled by Triple M and Israel Power Management 3000. It is designed for construction on a 62-dunam (15.5-acre) site, and will produce 430 megawatts of electricity using combined cycle power technology (natural gas as the main fuel and diesel oil as a backup).

The government approved the revised natural gas plan only a few days ago, with the omission of the commitment to refrain from changing anything in the gas sector for the next 10 years. The gas companies assert that the approval of the plan enabled them to sign the agreement with IPM. Noble Energy Inc. (NYSE: NBL) added that the agreement shows its continued commitment to developing Leviathan and the natural gas industry in Israel.

Under the Edeltech contract, Leviathan will supply 6 BCM to Edeltech's two new power stations: Tamar (143 megawatts) in the Haifa Chemicals plant in Mishor Rotem and Solad (77 megawatts) in the CHS plant in Ashdod. The value of the 18-year contract is estimated at $1.3 billion.

Commenting on the signing of the second contract, Delek Drilling Limited Partnership (TASE: DEDR.L) CEO Yossi Abu today said, "The Leviathan reservoir will complete the natural gas revolution in the local economy, which is switching to the production of cleaner, more efficient, and more environmentally friendly energy for the benefit of all Israelis. We are committed and determined to go ahead with the development of the Leviathan reservoir in order to bring natural gas to the Israeli economy in 2019, and are working on additional agreements to sell natural gas to electricity producers, industrial plants, and other customers in the local economy, and also for export to countries in the region."

Noble Energy business development manager Niv Sarne said, "We are pleased to sign the second Leviathan contract and the first to be signed after the government passed the new stability clause. This deal is an important milestone, in that it establishes another domestic contract that, together with additional domestic and export contracts, are essential for the quick development of Leviathan." He added that the contract was another layer in the implementation of the framework, and an important and welcome step that reflects Noble Energy and the partnership's commitment to developing Leviathan and a local oil and gas industry.

Sarne went on to say that IPM was a new power producer whose establishment was made possible by the natural gas discoveries, explaining that the supply of natural gas would enable IPM and other domestic customers to base their production facilities on a clean and inexpensive source of energy, and would enhance redundancy and energy security.

Published by Globes [online], Israel business news - www.globes-online.com - on May 29, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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