Israel's state-owned electric utility has agreed to buy natural gas worth $8 billion from the partners developing the Tamar site off Israel's Mediterranean coast. Israel Electric Corp (IEC) said in a statement to the Tel Aviv Stock Exchange the deal is for an estimated 3 billion cubic meters of gas a year for 15 years starting in mid-2013. To ensure price stability, the price of the gas will not be linked to volatile global prices, IEC said. It noted that the purchase price would enable financing of the Tamar field.
The deal, which still needs approval from partners in Tamar as well as Israel's government and regulators, comes as IEC has been facing fuel shortages due to problems with gas supply from Egypt. The pipeline from Egypt to Israel has been closed a number of times this year due to sabotage from militants opposed to the sale of gas to Israel.
A group led by Noble Energy is developing the Tamar prospect, which contains an estimated 8.4 trillion cubic feet of gas. Natural gas from Tamar is expected to arrive in Israel in 2013 and supply Israel with gas needs for more than 15 years. A nearby site, Leviathan, is nearly twice as large and due to be online around 2017.
Noble holds 36 percent of Tamar. Isramco Negev owns 28.75 percent, Avner Oil Exploration and Delek Drilling hold 15.625 percent each and Dor Gas Exploration has a 4 percent stake. Delek Drilling and Avner are both part of the Delek Group conglomerate.
IEC said natural gas from Tamar would be about 30 percent of its fuel basket for the foreseeable future. IEC also seeks clauses in the contract that would allow for a reduction in the price should the Tamar partners sign subsequent deals at lower prices and if Israel starts supervising natural gas prices. The partners have not yet agreed to these terms. But Delek said in a separate statement the partners would be holding talks with IEC to reach a final deal.