The Mari B natural gas well at Yam Tethys is running out faster than expected, raising concerns in Israel's electricity market. Sources inform ''Globes'' that that the well's production rate has fallen 30% in the past few days when seawater penetrated the one of the boreholes.
Yam Tethys says that the reduction in production is temporary, but the sources said that the company was liable to halt gas deliveries to spot customers in order to guarantee deliveries to customers with long-term contracts. Yam Tethys's spot customers include IDB Holding Corp. Ltd. (TASE:IDBH) units Makhteshim Agan Industries Ltd. (TASE: MAIN) and Nesher Israel Cement Enterprises Ltd.
The faster than expected dwindling of Yam Tethys's reserves is also liable to mean higher electricity prices, because Israel Electric Corporation (IEC) (TASE: ELEC.B22) will have to further increase the use of more expensive (and more polluting) diesel and heavy industrial oil to make up for the shortfall in natural gas for electricity production. The Public Utilities Authority (Electricity) raised electricity rates 10% in August, due to the 80% drop in natural gas deliveries from Egypt. Gas deliveries from Egypt have subsequently halted altogether, and now deliveries of Israeli gas will likely fall.
Yitzhak Tshuva-controlled Delek Group Ltd. (TASE: DLEKG) owns 53% of Yam Tethys through Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L), and Noble Energy Inc. (NYSE: NBL) owns 47%.
Yam Tethys's Mari B well has been in operation since 2004. It is Israel's sole remaining source of natural gas until the Noa, and especially the Tamar fields, both owned by Delek and Noble Energy, come on line. The Mari B well used to supply two-thirds of Israel's natural gas, and with the start of disruptions in Egyptian gas deliveries in February, production has been increased by 25-30%. Revised estimates predict that the production rate will begin to fall in early 2012, a year earlier than planned.
Published by Globes [online], Israel business news - www.globes-online.com - on September 21, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011