Israel-Turkey Detente Wagers Boost Zorlu Enerji to 12-Year High

  • Zorlu surges as much as 18 percent on the Istanbul bourse
  • Russia spat fires Turkish efforts to reach accord with Israel

Zorlu Enerji, a Turkish power producer with investments in Israel, gained the most in almost 12 years on Istanbul’s stock exchange after an Israeli official said the two countries reached a preliminary agreement to mend ties.

Zorlu Enerji Elektrik Uretim AS, as the company is officially known, climbed 18 percent to 1.49 liras in Istanbul, the biggest gain since January 2004, as of the close of trading in Istanbul. More than 72 million shares were traded, 6.6 times the three-month daily average, according to data compiled by Bloomberg. The Borsa Istanbul 100 index was down 1.7 percent at 72,460.38 points.

Relations between Israel and Turkey ruptured after a 2010 Israeli raid on a Turkish aid ship heading for the Gaza Strip. Turkey cut off diplomatic relations, demanding an apology, compensation for 9 Turks killed in the raid and an end to Israel’s blockade of the Gaza Strip, before it would consider repairing ties. A preliminary agreement was reached at secret talks in Switzerland, an Israeli government official told Bloomberg late yesterday, speaking on condition of anonymity.

Energy Diversification

Turkish officials told Bloomberg earlier this week that talks had intensified amid a deterioration in ties with Russia, a development that has accelerated Turkish efforts to seek greater energy diversification.

"Investors are pricing in that a potential deal between Israel and Turkey might include cooperation in the energy sector," Kenan Cosguner, an analyst at TEB Investment in Istanbul, said by phone on Friday. "Zorlu may benefit from potential cooperation."

Zorlu has a 25 percent stake in the Dorad natural gas combined-cycle plant in Israel, which started operation in May last year, according to its 2014 annual report. The Bursa-based company also has investments in Ashdod and Ramat Negev natural gas plants in the country.

Israeli Prime Minister Benjamin Netanyahu on Dec. 17 signed a directive advancing his government’s plan to develop offshore natural gas fields. “There is no chance of developing the large Leviathan gas reserve and other fields without the gas blueprint,” Netanyahu said. Houston-based Noble Energy Inc. discovered more than 50 trillion feet of gas in the Tamar and Leviathan fields in the eastern Mediterranean Sea.

Zorlu Enerji had declined 31 percent this year, its biggest annual drop since 2011. It reported a third quarter loss of 174 million liras ($59.4 million), compared with a loss of 93.7 million liras in the same period a year earlier.

Before it's here, it's on the Bloomberg Terminal.