Egyptian Gas Deals Threaten Tamar Exploration
December 16, 2010 by sspillman
Four Israeli firms have signed agreements to import Egyptian gas under a 20-year contract valued at between $5 billion and $10 billion, the Ampal-American Israel corporation said on Monday.
It said in a statement that Israel Chemicals, Dead Sea Works, Oil Refineries and OPC Rotem signed agreements to supply 1.4 billion cubic meters of gas over two decades, with an option to more than double that volume to 2.9 billion cubic meters.
The contract was signed with the Israeli-Egyptian East Mediterranean Gas, in which Ampal-American Israel Corporation has a 12.5% stake.
The gas supplies, which will fuel three private power plants, should start between the first and second quarters of next year, the statement said.
EMG has signed a number of agreements with Israeli firms since 2005, and the new contracts will boost the volume of Egyptian gas imports to 6 billion cubic meters worth $19 billion.
The Israeli business daily Globes said that the new contracts were a blow to companies involved in gas exploration in the Tamar fields off the port of Haifa in northern Israel, where reserves are estimated at 8 billion cubic meters.
The Texas-based Noble Energy is involved in that project.
Infrastructure Minister Uzi Landau on Sunday sent a letter to Prime Minister Benjamin Netanyahu warning that Israeli firms might give up on the Tamar field and instead turn to Egypt for gas supplies.
Landau said that the recent publication of a formal report recommending a sharp increase in royalties collected by the state on gas discoveries had created a “climate of uncertainty.”
The government-commissioned report recommends that royalties be nearly tripled to 60% once the companies involved in exploration and exploitation have recovered their initial investments.