Leviathan partners sign $2b gas deal

Leviathan

The latest deal is with Or Energies, which will buy 8.8 billion cubic meters of gas over 20 years.

The Leviathan partners notified the Tel Aviv Stock Exchange this morning that they have signed a $2 billion deal to sell 8.8 billion cubic meters of gas to Or Energies over 20 years. The gas will be used to operate the power station that Or Energy plans to build.

The Leviathan partners Noble Energy Inc. (NYSE: NBL) (39.66%), Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) (22.67% each) and Ratio Oil Exploration (1992) LP (TASE:RATI.L) (15%) recently announced that they had signed financing deals for the giant offshore gas field. The partners have also recently signed a range of deals to supply gas including to Paz Oil Company Ltd. (TASE:PZOL), Adeltech, the IPM power station in Beer Tuvia and the Jordanian electyricity company NEPCO.

Or Energies is connected to Dalia Power Energies Ltd., which is building a 600 megawatt power station based on integrated recycling technology.

The deal is on "paper only" and it will not help the Leviathan partners obtain further financing to develop the field. Or Energies will not receive permission to build its power station over the coming year before the electricity master plan and reform recommendations are completed. Even after that it is by no means certain that Or will ever receive a permit to build a power station. In effect the agreement is a declaration of intentions, which benefits both sides.

Delek Drilling and Avner CEO Yossi Abu said, "After signing the financing agreement for developing the first stage of Leviathan, we are happy to join up with a veteran partner in Israel's natural gas revolution, Or Energies, which becomes a customer in the historic project of developing the Leviathan field. Natural gas from Leviathan will facilitate the construction of more power stations producing electricity from natural gas, and allowing the Israeli economy to move another step ahead toward clean, efficient and more cost-effective production for the benefit of all of us."

Noble Energy Israel Marketing Manager Ori Loewenstein said, "Noble Energy greets the Leviathan Gas transaction that has been signed for 'Or Energy' power station. This is the fourth transaction for the partners in the local market and another power station that will be based on electricity production using inexpensive and clean energy."

According to Loewenstein, this transaction is promoting the partnership one more step towards a final investment decision for the Leviathan development.

Published by Globes [online], Israel business news - www.globes-online.com - on December 1, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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