The delivery of natural gas from the Tamar field will be doubled to 20-22 billion cubic meters (BCM) a year when a third pipeline from the field northwest of Haifa to the production platform offshore from Ashdod is built. The third pipeline will be able to deliver 6 BCM of gas a year to the Israeli market and the same amount to Egypt's liquefied natural gas (LNG) plant in Damietta, if the partners sign the gas supply contract with the plant's operator, Spain's Union Fenosa SA (BMAD: UNF).
The pipeline will cost an estimated $200-300 million to build, and could be completed in 2016-17.
Belying previous reports, it turns out that boosting Tamar's capacity does not depend on turning Yam Tethys's depleted Mari B field into an operational storage facility. The Tamar field, which was hooked up to the Israeli coast in March 2013, can currently supply 10 BCM of gas annually, the maximum capacity of the pipeline from the production platform to the onshore terminal at Ashdod. The double 150-kilometer pipeline connecting the production platform from wellhead has a capacity of 12 BCM a year.
Delek Group Ltd. (TASE: DLEKG) and Noble Energy Inc. (NYSE: NBL) control Tamar and own Yam Tethys. Their partners in Tamar are Isramco Negev 2 LP (TASE: ISRA.L) and Alon Natural Gas Exploration Ltd. (TASE: ALGS).
The report by the foreign consultant and the prospectus published by Delek units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) for their bond offering last week state that the compressors that will be installed at the Ashdod terminal will boost Tamar's production capacity by 50-60%. However, the consultant's report also states that in view of the limited capacity of the pipeline from the wellhead to the production platform, only the laying of a third pipeline will allow the gas field's full production potential with the compressors to be realized. The compressors will be installed by mid-2015, after a cost overrun from $216 million to $262.3 million.
The report states that the partners in Tamar will have to invest $3 billion more in the coming years to develop the field's next stages. This will double the initial investment of $3.05 billion. Tamar's current stage of development, based on five production wells, can pump only half the possible production capacity (5.7 trillion cubic feet or 28.3 BCM). Any additional production requires development of the field's second and third stages, at an investment of $2.9 billion by 2043. This payment includes $300 million that the Tamar partners will pay Yam Tethys for use of its facilities. This cost was anticipated and planned for.
Published by Globes [online], Israel business news - www.globes-online.com - on May 14, 2014
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