Sources inform ''Globes'' that
Israel Electric Corporation
and the Tamar partners headed by
Noble Energy Inc.
and
Delek Group Ltd.
are on the verge of a multibillion
dollar natural gas supply contract. The parties are finalizing the talks that
began two years ago. They have agreed in principal on the price and linkage
mechanism, but IEC purchases commitment is still open.
Delek units Avner Oil and Gas LP andDelek Drilling LP, which
each own 15.625% of Tamar, announced last week that there was significant
progress in talks with IEC and that the "parties are currently working on
a long-term contract".
A government source
involved in the talks told "Globes" that the parties have agreed on
the financial terms of the deal. Outside sources believe that IEC will pay a
basic price of $5.50 per million British Thermal Units (BTU).
The negotiations have
had their ups and downs. In December 2009, IEC and the Tamar partners signed a
letter of intent for the purchase of 2.8 billion cubic meters of natural gas a
year over 15 years by IEC, for a total of $9.5 billion. But the talks were then
suspended for six months following the establishment of the Sheshinski
committee and the approval of its recommendations for a special tax on oil and
gas reserves.
The negotiations resumed
in January 2011, but were again broken off in May when the Ministry of Finance
and Public Utilities Authority (Electricity) intervened, claiming that the
Tamar partners were exploiting the disruptions in Egyptian gas deliveries to
jack up the price of natural gas by 40%.
The 2009 letter of
intent set the price of gas at $4.50 per million BTU, which equals $5.14 today.
When the talks resumed in January, the Tamar partners asked for $6.50 per
million BTU. In June, "Globes" revealed that Delek controlling
shareholder Yitzhak Tshuva and his partners agreed to lower the price to $6 per
million BTU.
The price of the gas
will not be linked to the price of oil and coal, which is the normal practice,
but will use a new linkage mechanism of 2% a year.
Tamar's other partners areNoble Energy Inc. with a 36% stake, Isramco Ltd. with
28.7%, and Alon Natural Gas Exploration Ltd. with 4%.