Israel Tamar Gas Field Partners Target LNG Exports Out of Egypt

Source Press
Company Union Fenosa GasDelek Group Ltd.EGASENI S.p.A.Naturgy Energy Group, SAIsramco, IncNoble Energy Inc. 
Tags Oil & Gas Trading, Production/Development, Upstream Activities, LNG & Gas Storage/Processing
Date May 06, 2014

(Reuters) The partners in Israel's Tamar natural gas field said on Tuesday they had signed a letter of intent with Union Fenosa Gas to export up to 2.5 trillion cubic feet (tcf) of gas over 15 years to a liquefied natural gas (LNG) plant in Egypt.

Tamar was discovered in the eastern Mediterranean in 2009 and holds an estimated 10 tcf of gas. The larger Leviathan field was discovered nearby a year later and turned Israel into a potential energy exporter.

Union Fenosa Gas has a stake in an LNG facility in Egypt's Damietta LNG plant. The plant stopped operating last year due to a lack of gas supply since the Egyptian government began keeping its natural gas to meet surging domestic demand rather than sending it to the plant for export.

Texas-based Noble Energy, which has a 36 percent stake in Tamar, said both sides hope to finalise a binding agreement within six months, though any deal will require regulatory approvals in Israel and Egypt.'

Egypts oil ministry said it had asked for a meeting with the head of Union Fenosa for details. "There will be no agreements between any parties without the approval of the competent Egyptian authorities," the statement said."

Egypt has an integrated infrastructure for natural gas and its transportation, liquefaction, and marketing either internally or externally," it said.

A source close to the Israeli partners said if a final deal is concluded the gas would be sent through a new subsea pipeline which would have to be built.

The Damietta LNG plant is 80 percent-owned by Union Fenosa Gas, a joint venture between Spain's Gas Natural and Italy's Eni. The remaining 20 percent is split evenly between state-owned companies EGAS and  EGPC.

It is unlikely that there will be adequate supplies of Egyptian natural gas for the plant in the near future.

Egypt is facing its worst energy crunch in years, due largely to a gas shortage caused by dwindling production and a lack of investment to tap major reserves. Current levels fail to meet domestic demand and export commitments.

Cairo is scrambling to secure adequate fuel supplies to avoid popular anger over power cuts. Gulf oil producers have given Egypt a total of $6 billion in free fuel products to help fend off unrest on its streets in the summer when consumption soars.

The Israeli partners in Tamar said the price of the gas to be sold to UFG will be similar to the price in other export deals from Israel and based mainly on a linkage to Brent oil prices.

Isramco Negev has a 28.75 percent share of Tamar, Delek Drilling and Avner Oil both have 15.625 percent. Dor Gas Exploration holds the remaining 4 percent.

Source: EvaluateEnergy® ©2022 EvaluateEnergy Ltd