Gazprom Signs Deal for LNG Exports From Israel’s Offshore Fields

OAO Gazprom (GAZP)’s marketing unit signed an initial deal to buy liquefied natural gas from fields discovered off Israel’s Mediterranean coast.

Gazprom Marketing and Trading and Levant LNG Marketing Corp., a venture to develop an LNG export project, signed a letter of intent, Gazprom said in a statement. Levant LNG plans to sell gas produced at Israel’s Tamar and Dalit fields using a floating LNG plant.

A series of discoveries have given Israel the opportunity to become a gas exporter. The Tamar and Dalit fields are due to start output next year and are big enough to supply the country with gas for two decades. The larger Leviathan field holds more than the U.K.’s remaining reserves. Gazprom, Russia’s gas export monopoly, is trying to build am LNG trading business as it diversifies away from traditional pipeline customers in Europe.

Levant LNG was formed by Daewoo Shipbuilding (042660) and Marine Engineering Co., D&H Solutions and Next Decade LLC. Gazprom also met with partners in the gas fields including Isramco Negev 2 LP, Noble Energy Inc. (NBL) and Delek Drilling LP.

Isramco advanced 0.4 percent by 2:19 p.m. in Tel Aviv trading, while Delek Drilling gained 0.7 percent.

LNG is gas cooled to a liquid for transport by tanker. In the past, plants to liquefy the fuel have been built onshore. Royal Dutch Shell Plc (RDSA) has ordered the first floating plant from Daewoo competitor Samsung Heavy Industries Co. (010140) in South Korea for use in a field off Australia. It will cost about $5 billion.

Gazprom Global LNG is studying an LNG project in the U.S., where shale gas output has cut prices allowing terminals to be revamped for loading and production, Frederic Barnaud, executive director of the Moscow-based gas company’s unit, said in its corporate magazine.

To contact the reporter on this story: Will Kennedy in London at wkennedy3@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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