Noble Energy-Led Consortium Signs $680 Million Natural-Gas Deal in Israel

By J.J. McGrath | February 12 2012 8:06 AM

The U.S.-Israeli consortium developing the Tamar natural-gas field off Israel's coast said on Sunday it had signed a 15-year deal to supply an Israeli power-plant operator with an estimated $680 million worth of gas.

REUTERS/Cyprus Public Informat

The Homer Ferrington gas-drilling rig, operated by Noble Energy Inc. and drilling in an offshore block on concession from the Cypriot government, is seen last Nov. 21. Drawing on a gas reservoir in a not-too-distant area of the Mediterranean Sea, a Noble Energy-led consortium developing the Tamar field off Israel's coast said on Sunday it had signed a 15-year deal to supply an Israeli power-plant operator with an estimated $680 million worth of gas.

Sponsorship Link

Isramco Negev, a partner in the exploration group, said the deal was reached with Mashav Initiatives and Development, a subsidiary of Clal Industries that runs a power plant in central Israel.

The latest in a series of agreements the Tamar group has recently announced, the deal is for as many as 0.2 billion cubic meters of gas each year starting in the second half of 2013, when the offshore field is expected to begin production.

Isramco estimated the deal at $680 million, but said the value could fluctuate depending on gas prices and the final amount of gas Mashav buys.

Mashav is planning to expand its plant, but if it chooses not to do so, then it may buy less gas, Isramco said.

The deal is dependent on a number of conditions, including the Tamar group's ability to secure the remaining finances to develop the field, which has an estimated 9.1 trillion cubic feet of reserves.

Isramco holds a 28.75 percent stake in Tamar. Houston-based Noble Energy Inc., operator of the field, holds 36 percent; Israel's Delek Energy, through two subsidiaries, holds 31.25 percent; and Dor Gas Exploration holds 4 percent.

Last month, the consortium announced a $750 million deal to sell gas to Hadera Paper and contracts to supply Ramat Negev Energy Ltd. and Ashdod Energy Ltd. worth about $1.2 billion.