Tamar Group Signs $4 Billion Israel Corp Natgas Deals

26.11.2012 -

The U.S.-Israeli consortium developing the Tamar natural gas field off Israel's Mediterranean coast said on Monday it had signed gas supply deals worth about $4 billion with units of conglomerate Israel Corp.

In all, Tamar group will supply at least 16 billion cubic meters (bcm) of natural gas in three, multi-year contracts. Israel Corp previously had a deal to buy Egyptian gas, but Egypt stopped supplying gas to Israel earlier this year.

The Tamar prospect, whose estimated reserves of 274 bcm made it one of the largest discoveries of the past decades, is expected to begin production around April 2013.

Texas-based Noble Energy leads the drilling group with a 36% stake. Isramco Negev owns 28.75%, Avner Oil Exploration and Delek Drilling hold 15.625% each and Dor Gas Exploration has a 4% stake.

The largest of the three deals announced on Monday is with private power producer OPC Rotem. Rotem will buy 10.6 bcm of gas from Tamar for 16 years at a cost of about $2.5 billion.

Oil Refineries, Israel's biggest refiner, will pay $1.3 billion for 5.8 bcm of natural gas for seven years, while Israel Chemicals' Dead Sea Works will buy 0.26 bcm between 2015 and 2017 for a power plant it is building.

The companies said the amounts of gas and prices are subject to change.

Israel Corp becomes the second-largest customer for Tamar, which in July signed a 15-year, $23 billion contract with financially-strapped Israel Electric Corp (IEC), the country's state-owned electric utility. IEC will buy a minimum of 43 bcm.

Tamar has signed deals to provide natural gas to smaller power plants.

Companies are eagerly waiting for Tamar to come online next year since Israel is facing a gas shortage following the halt to Egyptian gas supplies. Egypt had supplied 40% of IEC's gas needs and the company had to turn to more expensive sources of fuel such as diesel and fuel oil.