Spain’s Union Fenosa Said Mulling Higher Israel Gas Imports

  • Contract talks said to increase gas supply to 6 bcm/year
  • Union Fenosa Gas operates Damietta LNG plant in Egypt

The companies operating Israel’s Tamar natural gas field are in talks to boost the quantities they will sell to Union Fenosa Gas SA, according to a person familiar with the matter.

The Tamar partners, led by Noble Energy Inc. and Delek Group Ltd., are discussing the sale of six billion cubic meters of gas per year, said the person, who asked for anonymity because the talks are private. 

The companies had signed a non-binding agreement in 2014 for about 4.5 bcm over 15 years. That deal was never consummated, however, as delays in finalizing a governmental framework for Israel’s budding natural gas industry froze progress in export talks. The companies also are discussing a new pricing arrangement, such as introducing floor prices, the person said.

The Tamar partners and UFG will sign a contract within a couple of months, the person said. The first gas will be piped to the Damietta liquefied natural gas plant in Egypt as soon as one year after the signing, the person said.

New Investment

The Tel Aviv Oil & Gas Index fell 0.6 percent to 1,109.53 as of 4:24 p.m. local time.

UFG owns 80 percent of the Damietta LNG facility, with the remainder belonging to Egypt via government-owned companies.

A spokeswoman for the Tamar partners declined to comment. UFG didn’t immediately reply to Bloomberg requests by e-mail and telephone seeking comment.

The partners will need to invest an estimated $1.5 billion to $2 billion to facilitate increased volumes of gas. That would finance three new wells in the Tamar field, upgrades to the offshore platform and a new pipeline that would connect to Damietta, the person said.

Arbitration Case

As part of the deal being discussed, UFG will drop its outstanding arbitration case against Egypt, the person said. UFG, which is a joint venture between Spain’s Gas Natural SDG and Italy’s Eni SpA, has been in a legal fight since 2013 with an Egyptian state-owned gas company over a broken supply contract.

Through its units, Delek Group owns 31 percent of the Tamar field, Isramco Negev 2 LP holds 29 percent and Dor Alon Energy in Israel Ltd. owns 4 percent. Houston, Texas-based Noble owns a 36 percent stake, though it agreed in July to sell 3 percent to Harel Insurance Investments & Financial Services Ltd. 

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