Noble Energy to sell $800 million stake of Tamar natural-gas field

The government is requiring Noble, operator of the natural-gas reservoir, to divest much of its ownership in the field on antitrust grounds.

By MAX SCHINDLER
Updated: JANUARY 31, 2018 10:50
Israeli natural gas field in the Mediterranean (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Israeli natural gas field in the Mediterranean
(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Houston-based Noble Energy will sell a 7.5% stake, worth $800 million, of the offshore Tamar natural-gas field to Tamar Petroleum, the company said on Monday.
In return, Noble expects to receive $560m. in cash and 38.5 million shares of Tamar Petroleum.
The government is requiring Noble, operator of the natural-gas reservoir, to divest much of its ownership in the field on antitrust grounds. Noble is required to shed its shares to 25% from its current 32.5% control of Tamar, the only operational gas field in the country.
“This is a significant step in fulfilling Noble Energy’s obligations under the Natural Gas Framework, as well as another layer in building a natural-gas market in Israel,” Noble Energy’s Vice President of Regional Affairs, Bini Zomer, said in a statement. “This deal will also increase the number of investors in the market to further the goal of market diversification that was set in the framework.”
The natural-gas holdings being sold are equivalent to 1.75 million cu.m. equivalent per day of 2017 production, the company said. The buyer, Tamar Petroleum, is a publicly traded company founded in 2017, many of whose shares are currently owned by Delek and Noble.
The forced sale of Noble’s shares follows the divestment by Delek of its 9.25% stake in June 2017. Both sales, meant to induce greater competition in the country’s gas market, may not accomplish that goal.
“Because the government forced Noble to sell, no international oil or energy company will have any reason to buy,” said a former public regulator for the Natural Gas Authority, who spoke on condition of anonymity.
“Why should a foreign company sign an agreement with the Israeli government or with an Israeli entity if they know that every contract is subject to the worries of the public that they’re not getting enough? How can you convince the future business partners of Israel that it’s a place where you can do business?” It is likely that the possible buyers will mostly be Israeli companies, along with ordinary Israelis, to own direct shares in the Tamar field.
According to the former regulator, foreign companies have expressed interest in owning shares in the fields, but they are wary of the political pressure.
Tamar is located some 80 km. off the shore of Haifa in waters 1,700 meters deep. It supplies Israel with some 65% of its energy needs, according to company data last year. Tamar began pumping gas in 2013, and the field holds some 200 billion cu.m.
Zomer added that the sale would help contribute to ongoing capital investments in Israel, including in neighboring gas field Leviathan. Noble holds a 39.66% stake in Leviathan, which is not yet developed.
The government had wanted to connect a neighboring gas field, Leviathan, by 2016 but anti-trust concerns delayed installation. Leviathan, which was discovered in 2010, is estimated to hold 622 billion cu.m., according to a Noble Energy presentation.
The field is set to be up and running by the end of 2019.
The current transaction comes after Noble sold 3.5% of the Tamar field in mid-2016 to insurance company and pension-fund manager Harel Group, along with the Israel Infrastructure Fund. Combined proceeds from both sales total nearly $1.25 billion.
Other companies that are currently or previously were part of the Tamar consortium, apart from Noble and Tamar Petroleum, include Delek subsidiaries Delek Drilling and Avner Oil Exploration; Isramco and Dor Gas Exploration