By Joshua Mitnick
TEL AVIV--The owners of an Israeli offshore gas field said they
plan to sign a 15-year deal to export 2.5 trillion cubic feet of
gas to a Spanish-owned liquefaction facility in Egypt, marking the
first agreement to export Israeli gas to a market with significant
demand.
The partners in the Tamar gas reserve, which include Houston's
Noble Energy, Israel's Delek Drilling and Avner Oil and Gas, signed
a nonbinding letter of intent on Monday to supply the gas to Union
Fenosa Gas's liquefied natural gas plant, which currently is
underutilized because of an energy crisis in Egypt.
The politically sensitive deal is expected to be completed
within six months and would revive Israeli-Egypt energy cooperation
after Egyptian gas exports to Israel collapsed in 2011 following
former President Hosni Mubarak's downfall. Egypt has been
struggling with a surge in demand for its natural gas reserves,
leaving Union Fenosa and BG Group with unused capacity at their LNG
facilities in the country.
The letter of intent "represents a major milestone for our Tamar
asset and is indicative of the strong regional demand for natural
gas," said Noble Energy Vice President Keith Elliot in a statement
on Monday.
A statement from Egypt's Oil Ministry said officials are seeking
details on the deal from Union Fenosa, and that any agreement would
need to get government approval and "serve the national interest of
the country."
Egypt's previous agreement to export gas to Israel was
politically unpopular in Egypt because of allegations that the
price was too low. The supply also was severely interrupted
following repeated attacks on the export pipeline in the Sinai
Peninsula. Ties between the governments deteriorated after the
downfall of Mr. Mubarak, but have improved after a Muslim
Brotherhood government was unseated by Egypt's military and popular
protests last year.
In recent months, the Tamar gas partners have signed deals to
supply gas to the Palestinian Authority's power generation company
and to Arab Potash Co. on the Jordanian side of the Dead Sea.
Supplying Union Fenosa's LNG would open up an outlet to markets
abroad with significantly larger energy appetites.
The Noble statement said the price for its gas would be similar
to other export deals in the region and be linked to the price of
Brent crude oil. A final deal would be subject to regulatory
agreement of both the Israeli and Egyptian governments, the
statement said.
Noble, Delek and Avner also own the rights to Israel's Leviathan
field, which contains nearly twice the amount of Tamar's estimated
10 trillion cubic feet of gas and is also slated for export. The
Israeli gas partners say there is regional interest in the
reserves, and that they are exploring agreements to export the gas
to Cyprus and Turkey.
Summer Said in Dubai contributed to this article
Write to Joshua Mitnick at joshua.mitnick@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
