Israel moved a step closer to becoming a major natural-gas exporter to the rest of the Middle East after signing a 15-year deal to sell fuel to Jordan.
Partners in Israel’s Leviathan gas discovery, including Houston-based Noble Energy Inc., announced a preliminary deal today to sell gas to Jordan’s National Electric Power Co. The agreement follows a similar pact to supply gas to Egypt.
The discovery of two giant fields under the Mediterranean Sea has opened the way for Israel to become an energy exporter to its Arab neighbors even as the region experiences the worst political tensions in a decade. Today’s deal would be worth more than $15 billion based on benchmark European prices.
This deal “and other regional export arrangements are advancing the first phase of the development at the Leviathan project,” Keith Elliott, Noble’s senior vice president for the Eastern Mediterranean, said in a statement. More than 60 percent of Leviathan’s initial capacity is covered by preliminary deals.
Noble and its partners have preliminary agreements to sell gas to two Egyptian gas export terminals operated by the U.K.’s BG Group Plc and Spain’s Union Fenosa Gas SA. The gas would be shipped through undersea pipelines before being liquefied and loaded onto tankers in Egypt. That would open a route for Israeli gas to reach global markets.
Noble said it plans to sign a final deal by the end of the year and is working with help from the U.S. State Department. Under the terms of agreement with National Electric, or Nepco, the Leviathan partners will supply 1.6 trillion cubic feet of gas over 15 years, equivalent to the energy in about 285 million barrels of oil.
Gas will be supplied through a pipeline over the border between Israel and Jordan, said Noble, which holds 40 percent of the Leviathan discovery. The price of the fuel will be linked to Brent crude oil.
Shares in Delek Group Ltd., a holding group with a stake in Leviathan, rose to the highest in seven weeks in Tel Aviv trading today. Other Israeli partners include Avner Oil Exploration and Ratio Oil Exploration.
Leviathan and the nearby Tamar discovery hold more than enough gas to supply Israel’s domestic requirements. The deals to use pipelines would allow the country to sell gas abroad, bringing billions in export earnings, without investing in liquefaction plants of its own.