Tamar partners to invest $2b to expand production

Tamar

The investment will enable gas exports to Union Fenosa's installation in Egypt.

The Tamar partners are set to invest $1.5-2 billion in expanding production capacity of the offshore natural gas field. The report was made to the Tel Aviv Stock Exchange (TASE) this morning by the Tamar partners, Delek Group Ltd. (TASE: DLEKG) gas exploration units Delek Drilling Limited Partnership (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L). The other partners are Noble Energy Inc. (NYSE: NBL), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and Alon Natural Gas Exploration Ltd. (TASE: ALGS).

The investment is required mainly due to the agreement signed in May with Union Fenosa to supply 4.5 billion cubic meters (BCM) of gas annually for 15 years. As the current capacity of Union Fenosa's liquefying installations are 7 BCM annually, the Tamar partners and Union Fenosa are examining options to significantly increase annual supply capacity without increasing the maximum overall quantity in the letter of intent that was signed.

Consequently Noble Energy is investigating, among other possibilities, expanding the production processing network so that it can reach 20.4 BCM annually of which 16 BCM will be for the domestic market.

Union Fenosa has a natural gas liquefying facility in Damietta, Egypt, which halted operations in 2012 following the Egyptian government's decision to use the gas for domestic use rather than exports. British Gas (BG) has a similar liquefying facility at Idku and their inability to meet commitments on the international market because Egypt redirected the gas to their domestic market has caused the two companies huge damage.

The expanded capacity that the Tamar partners are readying will include three additional production drills that will connect to the production network, an additional supply pipeline from the Tamar field to the Tamar platform and upgrading the Tamar and Mari B platforms.

In addition, a pipeline will be laid from the Tamar platform to Union Fenosa's installation in Egypt. The Tamar partners and Union Fenosa will share the costs of laying and operating the pipeline in Israeli economic water to the Egyptian border. Union Fenosa will bear the entire costs from that point to its installation in Damietta. Assuming that the agreement is finally signed the supply of gas from the Tamar field to Egypt is planned for 2017.

Published by Globes [online], Israel business news - www.globes-online.com - on November 20, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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