The Public Utilities Authority (Electricity) today warned the Leviathan and Tamar partners not to raise prices for natural gas in the wake of the dry holes at the Myra and Sarah wells, and the smaller-than-expected discovery at the Shimshon license. The Public Utilities Authority warned the partners that it would not allow Israel Electric Corporation (IEC) (TASE: ELEC.B22) to recognize a higher price for gas than the price agreed upon the gas supply contract with Tamar, signed in May.
Noble Energy Inc. (NYSE: NBL) owns 39.66% of Leviathan and 36% of Tamar, Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 22.67% of Leviathan and 15.625%% of Tamar. Ratio Oil Exploration (1992) LP (TASE:RATI.L) owns 15% of Leviathan. Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) owns 28.7% of Tamar and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Alon Natural Gas Exploration Ltd. (TASE: ALGS) owns 4%.
The warning is over the additional quantity of gas that IEC intends to buy in the coming years. The Public Utilities Authority is worried that the Leviathan and Tamar partners, which are due to bid in the tender for the additional gas supplies, will offer higher prices than the price set in the May contract if IEC exercises its option to buy more gas.
The Public Utilities Authority also said that it would refuse to recognize higher prices for spot sales of gas in contracts signed between the Tamar partners and independent power producers. The quantities of gas involved are small and are not binding on the gas suppliers. The Public Utilities Authority said that these quantities must be at least 10% less than the price of gas that the suppliers are bound to deliver to the independent power producers.
Published by Globes [online], Israel business news - www.globes-online.com - on November 6, 2012
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