Israel Refineries, ICL and OPC to acquire 2.2 BCM of natural gas in period of up to 18 years; agreement’s value may reach as much as $5 billion

Lior Gutman, Golan Hazani
Published: 11.28.12,

The gas supply agreement between Israel Corporation and the Tamar partnership has reached its final stages. Information obtained by Calcalist suggests that the second largest gas supply deal on the Israeli gas market is about to be signed between ICL, Israel Refineries and Israel Corp subsidiary OPC and the Tamar partnership.

Under the terms of the agreement, Tamar will supply the parties with an estimated 2.2 BCM natural gas for a period of up to 18 years. The deal’s value may reach as much as $5 billion, including an option for future purchases.

The cost of each unit (MMbtu) is expected to range from $5.6 to $5.8.

The current gas deal replaces Israel Corp’s $4.3 million contract from 2010 with Egyptian supplier EMG, which was nullified following a series of explosions in the Egypt- Israel pipeline.

It appears that Tamar will sign three different agreements with the companies: Israel Refineries, which is preparing to launch its new refinery, will be Tamar’s first client, with a short-term seven to eight-year agreement; second in line will be OPC, which will begin receiving gas in 2014 for its new 440 mega-watt power plant. OPC’s agreement will be have the longest term of the three and last 16-18 years.

The third agreement, with ICL, is in its final stages of negotiation and will set the terms for the supply of gas to the company’s 250 megawatt power station which will be completed in three years time.

The Tamar partnership includes Delek Drilling, Isramco Oil and Gas Production, Dor Gas and Noble Energy.

This report was originally published in Hebrew by Calcalist,7340,L-4312530,00.html