Oil Refineries Ltd. (TASE:ORL) in Haifa is the first Israeli victim of attack on the Egyptian gas pipeline in Sinai, which resulted in the suspension of deliveries. Oil Refineries was due to receive its first deliveries of Egyptian gas from East Mediterranean Gas Company (EMG) this week. The company's systems are ready to operate on gas, but it is not coming.
The story underscores the delicate situation at Oil Refineries parent company, Israel Corporation (TASE: ILCO), which just five months ago signed a multibillion contract with EMG to buy gas for subsidiaries Israel Chemicals Ltd. (TASE: ICL), Oil Refineries, and for the planned power station to be built by OPC Rotem Ltd.
With all due respect to Israel Corp. and its controlling shareholders, the Ofer family, they are not the main victims of the attack in Sinai. The competition between EMG shareholder Yosef Maiman and Yitzhak Tshuva, a shareholder in Yam Tethys, Tamar, and Leviathan is the story that grips the Israeli energy market. The balance of power in this competition changes with the speed and volatility of a rollercoaster.
In December 2010, Tshuva and his partners were on the verge of despair. The interim report of the Sheshinski committee was about to slash the net capitalization value of Tamar by 60%, while Israel Corp signed a $5 billion contract with EMG, after a close two-year race.
In December, Maiman and EMG had contracts worth $15 billion for the sale of Egyptian gas. At the same time, Tamar only had three letters of intent, amounting to just over $10 billion.
However, a few things have happened since then. The Sheshinski interim recommendations were greatly softened in favor of Tamar, Israel Electric Corporation (IEC) (TASE: ELEC.B22) decided to greatly increase its deal with Tamar, reportedly to $15-20 billion, and now the Sinai Bedouin have once again done Tshuva's work for him.
Published by Globes [online], Israel business news - www.globes-online.com - on April 27, 2011
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