Transmission lines for gas export to be financed by companies, not Israeli government

The companies will bear the cost of segments in the transmission system used only for export.

September 8, 2014 17:18
2 minute read.

IEI's exploratory oil shale drilling site at Zoharim. (photo credit: SHARON UDASIN)

Natural gas transmission pipelines built for conveying the resource to neighboring countries are set to be financed by the export companies themselves, rather than by the Israeli economy, the Natural Gas Authority Council announced on Monday.

More specifically, the companies will bear the cost of segments in the transmission system used only for export in order to reduce the financial burden on the Israeli consumer as much as possible, the National Infrastructure, Energy and Water Ministry explained.

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In addition, the export companies will participate in financing pipeline segments that need to be duplicated for redundancy, which may serve both for export purposes and for transmission in the local market.

Among the members of the Natural Gas Authority Council, which is under the umbrella of the Energy Ministry, are the director-general of the Natural Gas Authority, a Finance Ministry representative, an Energy Ministry representative and two public representatives.

“The export of natural gas to neighboring countries through the transmission system opens new horizons for our natural resources and increases the revenue from them,” said National Infrastructure, Energy and Water Minister Silvan Shalom. “The exports will bring us closer to our neighbors, [and] will enable us to create long-term cooperation that will bring an improvement to the situation of all the countries in the region.”

The National Gas Authority Council made the decision after experiencing a year of what the Energy Ministry described as “a new reality in the energy sector.”

Exporting gas through the national transmission system has gained momentum, particularly as contracts and letters of intent are signed with neighboring countries, the ministry said.

Last Wednesday, the Leviathan gas reservoir partners signed a letter of intent to supply about 45 billion cubic meters of natural gas to Jordan’s National Electric Power Company over a 15-year period.

In June, the Leviathan partners signed a letter of intent with the British Gas Group for a 15-year supply of 105 to its Idku natural gas liquefaction plant in Egypt.

Likewise, the partners of the neighboring Tamar reservoir signed a letter of intent with Spanish firm Union Fenosa in May, for the provision of 71 to that company’s Egyptian liquefaction facility in Damietta.

In February, the Tamar reservoir partners signed a $500 million deal to provide 1.8 of gas to the Jordanian firms Arab Potash and Jordan Bromine over 15 years, beginning in 2016, to power their Dead Sea facilities.

A month before, the Leviathan basin partners signed their first export deal – a $1.2b. sales agreement with the Palestine Power Generation Company, which would provide a future power plant in Jenin with 4.75 of gas over 20 years.

As far as the transmission lines for export are concerned, the National Gas Authority Council stressed that some pipelines that are constructed or duplicated will be used both for export as well as for Israeli domestic consumption in the future. In these cases, the council said it would determine what the relative share of the flow for export and local consumption would be.

The total investment required for establishing export transmission lines will require more than NIS 250m., the Energy Ministry added.

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