- Israeli gas explorer is most-traded stock in Tel Aviv
- Egypt says any deal will require government approval
Israel’s natural gas companies have started talks about exporting gas to Egypt, three months after the largest ever natural gas discovery in Mediterranean waters seemed to threaten regional sales. Stocks in Israeli explorers gained.
Partners in the Leviathan field, Israel’s largest, have agreed to enter non-binding negotiations with Dolphinus Holdings Ltd. in Egypt to supply as much as 4 billion cubic meters of natural gas annually for a period between 10 and 15 years, according to a Tel Aviv bourse statement. Dolphinus is a consortium of large, non-governmental gas consumers and distributors headed by Egyptian businessman Alaa Arafa.
“This shows that Israel’s natural gas discoveries will play a crucial role in building the Eastern Mediterranean region as a major energy hub,” Yossi Abu, Delek Drilling LLP chief executive officer, said in a phone interview. “Egypt has a huge need for gas, both for its economy and also for exports. Egypt is likely to become a regional hub for oil and natural gas and the Leviathan and Tamar fields are going to play a major role in making that happen.”
The talks signaled to investors that fears about the demise of Israel’s natural gas exports may have been premature. Shares of the explorers tumbled in late August as analysts said Eni SpA’s discovery would meet Egypt’s domestic demand. They recovered as Prime Minister Benjamin Netanyahu worked to finalize the long-delayed regulation of the industry, allowing for development of Leviathan. Houston-based Noble Energy Inc., which owns 40 percent of Leviathan, has said the regulatory framework must be approved so it can close export contracts.
“The Egyptian oil sector isn’t a party to the deal and its stance on allowing foreign or Egyptian companies to import gas has been previously announced and is clear,” the Egyptian Oil Ministry said in an e-mailed statement. “They must get state approval and the deal must satisfy national interests, involve added value to the Egyptian economy and include resolution of disputes by international arbitration.”
The TA Oil & Gas Index rose 1.1 percent to the highest in three weeks. Ratio Oil Exploration 1992 LP, Israel’s most-traded stock this year, led gains on the gauge with a 3.3 percent increase. Leviathan partner Avner Oil Exploration LP advanced 1.4 percent.