Minister of National Infrastructures Uzi Landau today called on Prime Minister Benjamin Netanyahu to urgently intervene in the crisis in the development of Israel's natural gas market. Landau called for a safety net for the partners in the Tamar license to help them finance the gas field's development. In a letter to Netanyahu today, Landau disclosed for the first time that the Tamar partners completly suspended all work on Tamar following the publication of the Sheshinski committee interim recommendations, because of the uncertainty over the government's policy on royalties from the project.
Since the publication of the interim recommendations, Landau has been warning about delays in the development of the Tamar gas field, which is supposed to begin delivering gas to Israel in 2013. Development of the field will cost an estimated $3 billion, and Tamar's partners have warned that the foreign banks financing the development may demand the reopening of the financing agreements because of the material change in the fiscal conditions recommended by the Sheshinski committee, including levying a 60% tax rate.
Landau wrote, "The establishment of the Sheshinski committee on the eve of the financial closing for the Tamar project caused great uncertainty in Israel's gas and energy market. Consequently, development of the gas field is delayed by over six months, and has been completely frozen since the publication of the interim recommendations."
Landau added, "Any additional delay in developing the gas field is liable to jeopardize supply from one of Israel's primary energy sources and cause real harm to the country's energy security. I call on you to personally and immediately intervene so that the Israeli government will immediately spread a safety net to develop the Tamar gas field."
Noble Energy Inc. (NYSE: NBL) owns 36% of Tamar, Yitzhak Tshuva-controlled Delek Group Ltd. (TASE: DLEKG) subsidiaries Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 15.625%, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) owns 28.7%, and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Alon Energy Exploration Ltd. owns 4%.
Published by Globes [online], Israel business news - www.globes-online.com - on November 21, 2010
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