One of the developers of a natural gas field off Israel’s Mediterranean coast said it has signed a letter of intent to provide gas to a facility in Egypt.
Delek Drilling reported it is negotiating a deal to provide 7 billion m3 (bcm) of natural gas from the offshore Leviathan gas field to British company BG’s plant in Idku, Egypt, through an underwater pipeline, annually for 15 years.
An unnamed official has claimed that the deal will be valued at 30 billion dollars, excluding building expenses which are expected to be covered by the BG Group, thus making this the largest gas-trade agreement in Israel’s history. BG has stated that they are planning to increase the supply of gas to their plant in Egypt.
After mentioning that the letter of intent is the first step towards a final agreement which is expected to be signed at the end of 2014, BG also described the deal as preliminary and non-binding for the parties. Furthermore, Sherif Ismail, Egypt’s Minister of Petroleum, stated that the import of Israeli gas would only be allowed under three conditions; these are state permission, establishment of rules for international arbitration and finally if a high value added with the deal to the economy of Egypt.
The Leviathan field, which is estimated to hold 19 trillion m3 of gas, is operated by the American Noble Energy Company which holds the largest share at 39.66%. Together, the Israeli subsidiaries of Delek Group, Delek Drilling and Avner Oil possess a 45.34% share of the field, with the remaining 15% belonging to the Israeli company Ratio Oil.
The reserve is accepted to well surpass the country’s domestic needs, hence, thanks to this reserve Israel will soon become the region’s leader in gas exports, reversing its previous role as an importer country. Even though there are many conflicts between Arab countries and Israel, partners have already signed agreements with Arabian, Jordanian and Palestinian companies, thus showing that BG is not the first who plans to export Israeli gas. In May, Noble Energy signed a letter of intent to export gas to the Spanish company Union Fenosa Gas SA from the smaller Tamar field.
