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    Tamar Representative in Talks with Union Fenosa Gas

Summary

Tamar gas field partners met with representatives of Union Fenosa Gas and BG to discuss the MOUs signed between the partners of Israel’s largest offshore fields and the operators of Egypt’s offshore LNG terminals.

by: Ya'acov Zalel

Posted in:

Natural Gas & LNG News, Liquified Natural Gas (LNG), News By Country, , Israel, East Med Focus

Tamar Representative in Talks with Union Fenosa Gas

A delegation representing the partners in Israel’s offshore Tamar gas field met last week in London with representatives of Union Fenosa Gas and BG to discuss the MOUs signed between the partners of Israel’s largest offshore fields and the operators of Egypt’s offshore LNG terminals. The MOUs, signed a year ago, are not binding agreements to export gas from Israel’s offshore natural gas fields to Egypt’s LNG facilities.

Because of the uncertainty concerning BG's situation, negotiations with UFG were more detailed and more advanced. The two main project partners, Delek Drilling and Noble Energy are expecting the contract to be completed and signed within a month from the final approval of the natural gas framework by the Israeli government. It's still unclear when that will happen. Israeli politicians and bureaucrats are currently in a recess because of the Jewish holidays season, that will end early next month.

The Israeli Parliament approved earlier in the month the natural gas framework. However this approval will only be final once ratified by Israel’s Antitrust authority or its Economy Minister on the grounds of security interests. The Antitrust Authority is currently operating without a general director following the resignation of Mr David Gilo, its former commissioner, due to his objection to the natural gas framework. The Economy Minister is also refusing to bypass the Antitrust authority. 

According to the framework, partners in the Tamar gas field will be allowed to export natural gas from Tamar despite a prior government resolution that has designated Tamar gas field as a strategic asset and stated that exports from Tamar will be only permitted after the development of Leviathan is completed, including the infrastructure linking the field to Israel’s shore. Tamar is currently the only gas field that supplies Israel with natural gas via one pipeline.

In the MOU signed between the Tamar partners and UFG it was agreed that UFG will buy 70 BCM or about 20% capacity for an estimated amount of $70 billion over the period of 15 years. However, since signing the MOU, the prices of oil, followed by those of natural gas, have dropped by at least 50% and there were quite a few other changes in the natural gas marketplace.

If a final agreement is reached, the Tamar partners will have to invest about $1.5 billion in new production facilities and a pipeline. Natural gas from Tamar will be delivered to UFG from a rig in the Mediterranean and will be streamed to the Damietta liquefaction facility in Egypt. UFG then will be in a position to export the LNG to Europe.