Gov’t, Phoenicia Glass sign natural gas hookup agreement

Agreement will provide natural gas connection to factory, which has been in danger of closing due to its financial state

Offshore Gas Drilling 311 (photo credit: Courtesy)
Offshore Gas Drilling 311
(photo credit: Courtesy)
Officials from the Energy and Water Ministry and Israel Natural Gas Lines (INGL) signed an agreement with Phoenicia Israel-America Flat Glass on Tuesday to provide a natural gas connection to the factory, which has been in danger of closing due to its financial state.
The signing followed the cabinet’s approval of the connection at Sunday’s cabinet, but is the result of an original government decision to hook up Phoenicia – located in the Zipporit Industrial Zone, just outside Nazareth – to the gas lines at the end of 2005.
Phoenicia is Israel’s sole producer of float and low-iron glass, generating other products as well, including laminated safety glass, tempered glass, solar energy glass and mirrors, according to the company. The delay in the natural gas hookup had put Phoenicia at risk of closing, and the company owes an estimated NIS 323 million in debts, primarily to suppliers and banks, according to Globes.
Phoenicia has been working since August under a stay of proceedings, which was extended to October 31 last week. In September, Energy and Water Minister Uzi Landau originally submitted a proposal to the government to connect Phoenicia Glass to the natural gas transmission lines, which would allow the company to begin receiving gas by 2014.
Connection to natural gas would save the company around NIS 20m. in expenditures, Landau had written in his proposal.
At the signing, Ron Haimovsky, chairman of Israel Natural Gas Lines (INGL) praised the minister for his involvement and for the pressure he put on the government to get approval for the connection, while INGL CEO Shmuel Turgeman stressed the importance of getting industry running on natural gas in general.
“We will continue to muster our efforts and see this project through until it is finished,” Landau said.
For six years, Phoenicia has been waiting for its natural gas hookup, though “at the beginning we weren’t sure there was gas in Israel,” Phoenicia CEO Eran Haimovitz told The Jerusalem Post at the ceremony.
“When there was gas, there were a lot of promises, talks from the government,” Haimovitz said.
The agreement calls for transmitting gas to the factory through an INGL pipeline by April 2014, meaning that the company will still need an intermediary solution.
Assuming that the firm receives approval from the Natural Gas Authority, Phoenicia will temporarily import Compressed Natural Gas (CNG) by the private company SupraGas beginning in September 2013, Haimovitz explained.
Having natural gas available for the factory’s energy needs will do wonders for Phoenicia, which had been suffering losses directly due to its energy sources, according to Haimovitz. The natural gas, he stressed, will bring the company to “a better future.”
“The effect of the lack of natural gas for the company was $15m. per year for a company with an $80m. yearly revenue,” he said.
As the country prepares itself for the vast amounts of natural gas that will come to its shores from the Tamar and Leviathan reservoirs in the near future, Haimovitz said he is confident that the government will keep domestic industries like his as a priority over export.
“I am sure they will support internal industry first and then export natural gas to Jordan,” he said.