Paz signs $700m Leviathan gas deal

Leviathan drilling photo: Channel 10

The Israeli fuel company will buy 3.12 BCM of gas over 15 years.

Israeli fuel company Paz Oil Company Ltd. (TASE:PZOL) announced this morning that its subsidiary Paz Ashdod Oil Refinery had signed a natural gas supply agreement with the Leviathan partners,

Under the terms of the agreement, the Leviathan partners will supply Paz Ashdod Oil Refinery with 3.12 billion cubic meters (BCM) of natural gas over a maximum period of 15 years or until the Paz unit will end its need for quantities of gas.

Paz estimates that the overall value of the agreement will amount to $700 million, on the assumption that Paz Ashdod Oil Refinery will need the amount of gas stipulated in the "take or pay" contract. The contract reflects a price of $6.20 per thermal unit. The company makes clear, however, that the financial value will effectively derive from a range of factors including the amount of natural gas that it will actually buy, the price of a barrel of Brent crude oil, and electricity production tariffs.

Noble Energy Israel country manager Bini Zomer said, "Noble is pleased to continue our longstanding relationship with Israeli industry. This additional Leviathan contract signifies our continued commitment to supplying the domestic market and brings us another step closer to a final investment decision."

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%).

Paz Ashdod Oil Refinery is engaged in producing oil refining products and producing electricity for both its own use and selling to external customers.

Published by Globes [online], Israel business news - www.globes-online.com - on November 24, 2016

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

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Leviathan drilling photo: Channel 10
Leviathan drilling photo: Channel 10
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