BP PLC began delivering liquefied natural gas to Israel via an
offshore buoy Thursday to help meet Israel's energy needs until it
begins production of local gas from an offshore field later this year,
government officials said.
The buoy was built off the Israeli coast by government-owned
Israel Natural Gas Lines Co. at a cost of 500 million shekels ($134
million).
The gas is meant to satisfy the needs of the state-owned
Israel Electric Co. until at least April, when Israel's offshore Tamar
reserve will begin supplying gas.
"This is an important step for guaranteeing Israel's energy
independence," Uzi Landau, minister of energy and water resources, said
at a ceremony Thursday as the first ship filled the buoy with gas.
The Israeli gas shortage follows the cancellation by East
Mediterranean Gas Co. of its supply deal with Israel last year in the
wake of political changes in Egypt and numerous attacks sabotaging its pipeline in the Sinai Peninsula.
Since 2008, Egypt
had supplied Israel with about 40% of its energy needs, or about 1.7
million cubic meters of gas a year. Israel relied on the local offshore
Yam Tethys reserve for the remaining 60%. But after the cancellation of
the Egyptian deal, and the depleting of the Yam Tethys reserve, the
electric company turned to more expensive sources of fuel, such as
diesel, that pushed up electricity prices and forced Israel Electric to
depend on government guarantees to issue more bonds.
The electric company hasn't disclosed how much it is paying BP for the gas, or how much gas it planned to buy.
"But the cost of the buoy is much higher than the gas," said
Elad Krauss, energy sector analyst at Harel Finance Ltd. in Tel Aviv.
"There is no savings by buying gas from the buoy over diesel for the
next few months."
But Mr. Krauss said that although the buoy was a large
investment, and will not be used on a regular basis after the local
Tamar field begins to produce gas, it does offer stability and security
to Israel's energy supply, something that has been lacking.
In the case that something goes wrong with Tamar, the buoy
will allow foreign companies to supply gas to Israel, Mr. Krauss said.
Currently, Israel only has one gas pipeline, the closed one from Egypt, which is unlikely to reopen in the near future.
Israel's offshore Tamar field contains 9 trillion cubic feet
of gas and is scheduled to begin production later this year. Another
larger offshore gas field, Leviathan, that contains 16 trillion cubic
feet of gas is slated to begin production later this decade. These two
fields will eventually meet all of Israel's gas needs and turn the
country into a gas-exporter, although the government has yet to specify
how much gas it will allow for export.
Israel Natural Gas Lines contracted Italy's Micoperi Marine
Contractors to build the bouy, which can accept up to 3 million cubic
meters of gas a year.