Israel approves natural gas deal with Jordan

PM Netanyahu and Energy Minister Shalom authorized agreement to export Tamar natural gas to 2 Jordanian concerns.

Cementing Israel’s first natural gas export deal with Jordan, National Infrastructure, Energy and Water Minister Silvan Shalom and Prime Minister Benjamin Netanyahu authorized an agreement to convey Tamar reservoir gas to two Jordanian companies on Thursday.

Israel’s natural gas platform – Photo: MINISTRY OF NATIONAL INFRASTRUCTURES

The ministerial approval follows the February 2014 announcement of the transaction between the Tamar reservoir partnership and the Jordanian firms. The approximately $500 million deal enables the provision of up to 2.2 billion cubic meters of gas to the Arab Potash and Jordan Bromine companies over 15 years, for use at their respective facilities near the Dead Sea.

While the signers initially agreed upon the provision of 1.8 b.cu.m. meters of gas at a fixed price, an additional 0.4 b.cu.m. has been approved to be provided as needed, using spot pricing.

“This is a historic and significant agreement for Israel’s foreign relations, and it opens the doors to additional agreements that are on the way with countries in the region,” Shalom said on Thursday.

The 282-b.cu.m. Tamar reservoir, located about 80 km. west of Haifa, began flowing to Israel in March 2013.

Houston-based Noble Energy holds 36 percent of the basin, while Delek Group subsidiaries Delek Drilling and Avner Oil Exploration each own 15.625%. In addition, Isramco has a 28.75% stake and Dor Gas Exploration owns 4%.

“The natural gas agreement comes following the Red Sea- Dead Sea canal project and the water agreements signed recently, all of which are evidence of the strong relationship being formed between the two countries,” Shalom said.

The energy minister was referring to a deal signed between Jordan and Israel on February 26, for the swapping of water as well as the funneling of brine from the Red Sea to the Dead Sea. That agreement, worth some $800m., stipulates that Jordan and Israel will share potable water produced by a future desalination plant in Aqaba, while a pipeline will supply residual brine generated by the plant to the Dead Sea. In exchange for its portion of the desalinated water produced in the South, Israel agreed to double its supply of water to Jordan from Lake Kinneret (the Sea of Galilee).

Like this water sharing deal, Shalom stressed that the sale of Israeli natural gas to the Jordanian firms could pave the way for future such export arrangements.

“The agreement is part of the Israeli natural gas export policy, which we hope will soon be implemented and solved despite the difficulties in recent months,” Shalom said. “This is the first deal, but a very significant one, and [it] will strengthen Israel’s international standing as an energy stronghold.”

The difficulties he was referencing relate to an ongoing dispute between the Israeli government and the largest gas companies, which has largely frozen the development of Tamar’s neighboring Leviathan reservoir.

Noble Energy holds 39.66% of the 621-b.cu.m. Leviathan basin, located about 130 km.

west of Haifa, while Delek Drilling and Avner Oil each own 22.67% and Ratio Oil Exploration holds 15%.

On December 23, Antitrust Authority commissioner David Gilo announced that he would review whether the presence of Delek and Noble in Israel’s Mediterranean gas sector constitutes an illegal “restrictive arrangement.” In addition, the commissioner withdrew his support for a proposed consent decree that would have allowed the companies to resolve the issue by selling two smaller gas reservoirs, Karish and Tanin.

By February 18, an interministerial team presented Noble Energy and the Delek Group with a draft solution to the stalemate. The outline proposed that the Delek Group subsidiaries exit the Tamar reservoir completely and that Noble Energy sell its portion of the basin that would have been directed to the domestic market.

In addition, the document called for the companies to separately market any gas sold from Leviathan to Israeli consumers.

The partners would be required to sell the Karish and Tanin reservoirs.

But the following week, Gilo announced that he would postpone his decision regarding the status of the companies for another two months, allowing for negotiations to continue.

A final resolution regarding the status of Noble Energy and the Delek Group in Israel’s gas sector still remains to be seen.

Since then, as a result of the uncertainty generated by the antitrust dispute, a deal to supply Leviathan gas to a future Palestinian power plant was conditionally terminated in March. Nonetheless, also in March, the Tamar partners signed an agreement to supply 5 b.cu.m. gas to Egypt’s Dolphinus Holdings Limited for seven years.

Other regional letters of intent that still have not become full-fledged agreements include the provision of 45 b.cu.m. of Leviathan gas to Jordan’s National Electric Power Company, the supply of 71 b.cu.m. of Tamar gas to Spanish Union Fenosa’s Egyptian liquefied natural gas plant and the supply of 105 b.cu.m. of Leviathan gas to the British Gas LNG plant, also in Egypt.

 

View original The Jerusalem Post publication at: http://www.jpost.com/Israel-News/Israel-approves-gas-export-deal-with-Jordan-396038

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