IEC confirms negotiating natural gas contract with Isramco, BG

Israel Electric Corporation has signed a supply contract only with Yam Thetis to date. The agreements would be worth billions of shekels.

Israel Electric Corporation (IEC) has revealed for the first time that it is negotiating to buy natural gas from British Gas and Isramco (Nasdaq:ISRL; TASE:ISRA.L). “Globes” has obtained the protocol of a Knesset Economics Committee meeting held two weeks ago to this effect.

Until now, IEC has declined to confirm whether it was negotiating to buy natural gas from these concerns, at one point even denying that it was negotiating with Isramco at all.

IEC SVP finance and economics Joseph Dvir, who is responsible for the natural gas negotiations, told the Economics Committee, “We’ve also begun talking with British Gas and Isramco. There is room for two or three natural gas suppliers and even more in the long term. We talking about buying [1.5 billion cubic meters] of natural gas a year from British Gas.”

IEC has signed only one natural gas supply contract to date - with Yam Thetis, for 1.2 billion cubic meters of gas a year. The 11-year Yam Thetis contract is worth $150 million a year. Dvir’s comments imply that the British Gas deal is larger.

British Gas is offering IEC natural gas from its fields off the Gaza coast, in which it is partnered with Palestinian businessmen. Isramco comprises Alon Group, Dor Chemicals (TASE:DORC), Clal Industries and Investments (TASE: CII), Israel Petrochemical Enterprises (TASE:PTCH), Delek Group (TASE:DLEKG), Sonol and the Steinmetz group. Like Yam Thetis, Isramco has found gas offshore from Ashkelon, although in smaller quantities. Isramco’s field is estimated to have gas worth $1 billion, while Yam Thetis and British Gas’s fields are estimated to be several times larger.

Published by Globes [online] - - on July 6, 2003

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