Feb. 19 (Bloomberg) -- Noble Energy Inc., a partner in Israel’s Tamar natural-gas field, signed a $771 million agreement to supply Arab Potash Co. with fuel starting in 2016, the Jordanian company said.
The signing in Jordan’s capital of Amman marks Israel’s second gas export deal. Jordan is seeking to secure its energy supply after repeated disruptions to imports of Egyptian fuel as a result of pipeline bombings in Sinai. The U.S. State Department helped mediate the talks, according to a person familiar with the matter who spoke on condition of anonymity because the matter is private.
The 2010 discovery of the offshore Leviathan field, coming after the nearby Tamar find, proved a bonanza for Israel, which expects the gas to meet its needs for a quarter of a century, while also enabling exports. Noble will build a pipeline south of the Dead Sea to supply Arab Potash with 2 billion cubic meters of gas for 15 years at “preferential prices,” the Amman-based company said in a statement.
Jordan is one of two Arab countries that have signed a peace agreement with Israel. Israel’s Delek Group Ltd., via its units Delek Drilling LP and Avner Oil Exploration LLP, is a partner in the Tamar field together with Houston, Texas-based Noble Energy. Isramco Negev 2 LP is also a partner.
Israel, which itself imported gas from Egypt gas until bombings cut deliveries, reached its first export agreement in January -- a 20-year deal to supply a planned Palestinian power station. Noble and its partners at Leviathan, the larger of the two offshore fields, said they’ll receive about $1.2 billion to send gas to the plant to be built in the northern West Bank city of Jenin.
“This agreement evidences the growing regional opportunities for our natural gas and brings forward value for the Tamar asset,” Keith Elliott, Noble’s senior vice president for the eastern Mediteranean, said in an PR Newswire statement. The company is in negotiations to sell “significant quantities of natural gas from both fields” to additional customers, he said.
Delek Group shares gained 0.3 percent to 1,286 shekels at the 4:30 p.m. close in Tel Aviv. Its Delek Drilling unit fell 0.3 percent while Avner declined 0.1 percent. Arab Potash was little changed in Amman.
The agreement will reduce Arab Potash’s production costs, make it more competitive and help protect jobs for more than 2,000 employees, Chairman Jamal Al Sarayreh said in the statement. The mineral producer’s shift from using heavy fuel to less expensive gas is projected to save it 235 million dinars ($331 million), or an average of 11 dinars per ton of potash produced, General Manager Brent Heimann said in the statement.
Jordan’s higher costs for imported fuel are draining government coffers of an additional $3.5 million a day, Energy Minister Mohammad Hamed said in a Feb. 11 interview, as sabotage in Egypt interrupted the flow of gas from Jordan’s traditional supplier.
The kingdom, which imports almost all of its energy needs, is the Middle East’s smallest economy after Bahrain.