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    Noble, Delek Gain Control of Pipe to Egypt


The deal paves the way for Israel to export gas to Egypt, using a line formerly used in the other direction.

by: Ya'acov Zalel

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Noble, Delek Gain Control of Pipe to Egypt

Delek Drilling and Noble Energy, the dominant groups in the Israeli natural gas industry are to acquire 39% of the EMG gas pipeline in partnership with Egypt's East Gas, they said in an Israeli stock exchange filing September 27. The line connects Ashkelon in Israel to El Arish in northern Sinai, Egypt. The companies intend to use the line, now idle, to export their gas to Egypt and the share acquisition gives them control.

The new venture, which is incorporated under the acronym EMED, will pay $518mn, according to a valuation of $1.3bn. East Gas will own 50% of EMED, Delek Drilling will hold 25% and Noble Energy 25%.

Delek Drilling and Noble Energy will pay $185mn each and East Gas will pay the rest. East Gas holds a 10% stake in EMG so it appears that a major part of its part in the deal will be in transferring its shares to EMED.

EMG will sign an agreement with the Tamar and Leviathan partnerships, the two gas fields off shore Israel, controlled by Delek Group and Noble Energy for the use of the pipeline to transmit gas from Israel to Egypt. Tamar and Leviathan signed large contracts worth $15bn this year for sales of natural gas to Egyptian customers in a 10-year deal. Annual sales volume are expected to be 32bn m3.

EMG's new ownership structure includes the PTT Group, a group of Thai investors whose holding in the project will remain at 25%; the Egyptian EGPC, which will be reduced by 1% to 9%, and MGPC, whose holding will decline from 28% to 17%. Yossi Merhav, the Israeli businessman, will sell all of his holdings in the company, as will other Israeli parties.

In order to execute the transaction, EMG will waive all claims it had against the Egyptian government.

Noble noted that initial gas delivery through the EMG Pipeline is expected to occur from the Tamar field to Dolphinus Holdings Limited in Egypt, under Noble's existing interruptible natural gas sales agreement; at startup of the Leviathan field by end-2019, Noble anticipates selling at least 350mn ft3/d (3.6bn m3/yr), gross, to contracted customers in Egypt.