A man points as he stands on a tanker carrying liquified natural gas, ten miles off the coast from Hadera.
(photo credit: REUTERS)
A final agreement between the Tamar gas reservoir partners and the Union Fenosa Egyptian liquefaction facility will be reached in the coming weeks, industry sources told The Jerusalem Post on Thursday.
Avner Oil Exploration, one of the developers of Israel’s Tamar basin, informed the Tel Aviv Stock Exchange on Thursday that the partners and Union Fenosa Gas were extending their period of negotiations toward a final agreement regarding gas sales to the liquefaction plant.
The Tamar partners originally signed a letter of intent with the Spanish firm in May, in which the parties expressed their interest in pursuing a 15-year contract for the transfer of up to 71 billion cubic meters (b.cu.m.) of gas.
While the initial period of negotiations was only supposed to last five months, the partners said they needed to extend the period “to allow the continuation of negotiations in advanced stages toward the completion and signing of a binding agreement.”
The Tamar reservoir, a 282-b.cu.m.
basin about 80 kilometers west of Haifa, began flowing to Israel’s domestic market in March 2013. Noble Energy holds 36 percent of the Tamar basin, Delek Drilling and Avner Oil Exploration each own 15.625%, Isramco controls 28.75% and Dor Gas has 4%.
The neighboring 621-b.cu.m. Leviathan gas reservoir, located about 130 km. west of Haifa, is expected to begin flowing sometime in 2017-2018, assuming bureaucratic and financial hurdles are surmounted.
Noble Energy owns 39.66% of Leviathan, while Delek Drilling and Avner Oil – both subsidiaries of the Delek Group – each have 22.67% and Ratio Oil Exploration holds 15%.
Union Fenosa Gas holds 80% of its subsidiary Spanish Egyptian Gas Company, which is responsible for operating the liquefaction plant in question, located in the city of Damietta, near the Suez Canal. The remaining 20% of the company belongs to the Egyptian State Companies and Egyptian Natural Gas Holding.
The plant, which produces liquefied natural gas for export, has a liquefaction processing-rate capacity of 7.56 b.cu.m.
per year, according to data from Union Fenosa.
Production at the Damietta plant began in late November 2004, with its first shipment of LNG heading to a re-gasification plant in Spain in January 2005, the Spanish company said.
The LNG plant stopped operating in the past few years due to a lack of gas supply after the Egyptian government began keeping natural gas at home in the summer of 2012 due to domestic fuel shortages, a Reuters report said.
The letter of intent and resultant negotiations between the Tamar partners and Union Fenosa are among various other such letters of intent and agreements signed with Israel’s neighbors.
Just a month after the Union Fenosa letter of intent was signed in May, a similar letter of intent was signed between the Leviathan partners and British Gas for another Egyptian liquefaction facility.
Just over two weeks ago, the Tamar reservoir partners signed a letter of intent to sell 2.5 b.cu.m. annually to the Egyptian firm Dolphinus Holdings through the former Egyptian East Mediterranean Gas company pipeline.
In September, the Leviathan partners signed a letter of intent to sell 45 b.cu.m. of natural gas to Jordan’s National Electric Power Company over a 15-year period.
These letters also followed full-fledged agreements to sell gas to a future Palestinian power plant in Jenin and to Dead Sea factories in Jordan, which were both signed earlier this year.