Israel's Leviathan, Egypt's Dolphinus to negotiate gas export deal

Sides sign letter of intent to reach final deal that would set floor price for gas and link it to price of oil.

THE TAMAR gas field platform juts above the Mediterranean (photo credit: MARC ISRAEL SELLEM)
THE TAMAR gas field platform juts above the Mediterranean
(photo credit: MARC ISRAEL SELLEM)
The companies developing Israel’s Leviathan gas reserve announced on Wednesday an agreement to negotiate the export of as much as 4 billion cubic meters annually of gas to Egypt’s Dolphinus Holdings.
The sides signed a letter of intent to reach a final deal that would set a floor price for the gas that links it the price of oil. They said they expected to reach a deal quickly on the contract, which would last 10-15 years.
“The regional potential is becoming a reality, and Israeli gas discoveries are poised to play a key role in creating a regional energy market,” said Delek Drilling CEO Yossi Abu.
The announcement comes as Israel prepares to move ahead with a controversial outline to regulate Leviathan’s development.
Energy Minister Yuval Steinitz said Wednesday’s agreement proved the importance of passing the outline, which would pave the way for the Delek Group, Noble Energy, Avner Oil and Gas and Ratio to develop the field, but require Delek and Noble to sell part of their stakes.
“From Israel’s perspective, there is not only an economic opportunity here to develop the Leviathan field, but also for the first time to consolidate the peace treaties with Egypt and Jordan through a real economic link with real political importance,” Steinitz said, referencing a $15 billion, 15-year plan to export gas to Jordan, as well.
On Wednesday, the Knesset Economic Affairs Committee discussed Prime Minister Benjamin Netanyahu’s plan to bypass objections from the Anti-Trust Authority, which has opposed the outline.
Though the committee has only advisory power, it provided a platform for politicians to air grievances about the plan, including some opposition to exporting any of the gas.
Yafa Friedman, an expert from the Association of Sustainable Economics, told the committee Israel should keep all the gas for its own economy, but Likud MK Yoav Kisch shot back that “without export, there will not be gas, there will not be tax revenues, there won’t be anything.”
In March, Dolphinus signed an approximately NIS 4.8 billion ($1.2b.) deal stipulating that the 282-billion-cubic- meter Tamar reservoir will supply it with gas for seven years – including a minimum of 5 bcm during the first three years of the contract.
Sharon Udasin and Reuters contributed to this report.