Jordan gas deal could be delaying Noble financing

Leviathan drilling photo: Channel 10

Negotiations between Israel and Jordan on a gas exporting framework agreement have yet to be completed.

Almost two months after the first date on which the market expected Noble Energy to announce the financing for development of the Leviathan natural gas reservoir, and one month after the deadline for making the announcement, the gas partnerships are still dismissing questions about the reason for the delay. It now emerges that the reason is the ongoing negotiations between Israel and Jordan over a framework agreement to guarantee the 15-year commercial agreement for exporting 3 BCM of gas annually from Leviathan to the Jordan Electric Power company.

A senior figure in the Ministry of National Infrastructure, Energy, and Water Resources responded to a query about the state of the negotiations by saying, "We are not talking about it," and the ministry's official response was "No response." The purpose of the framework agreement between the two countries is to guarantee political stability for the long-term contracts, so that the contract will not be terminated in the middle of its period, as happened with the contract with Egypt. As with Egypt, there is also concern about sabotage of the gas pipelines and other facilities, and questions arise about security and financing for repairs, if needed.

The negotiations for exporting gas to Turkey can also go through only after the respective governments sign a framework agreement. Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz and his Turkish counterpart, Berat Albayrak, agreed on April this year as a target date for reaching an agreement, but a delay of at least 2-3 months is likely. Ministry of National Infrastructure, Energy, and Water Resources director Shaul Meridor was quoted in this context as saying that the future agreement with Turkey should be hedged against a possible recurring worsening in relations between the two countries.

According to an announcement to the Tel Aviv Stock Exchange (TASE) by Delek Group Ltd. (TASE: DLEKG) and Avner Oil and Gas LP (TASE: AVNR.L) on November 27, 2016, in which they announced a $1.5-1.75 billion financing agreement for the development of Leviathan, the partnerships have until February 20 to notify the financing banks, HSBC and JP Morgan, of the cancelation of their letter of undertaking for taking the loan. If the lack of clarify persists beyond this time, the partnerships are likely to request an additional extension from the banks.

The Leviathan partners said in response, "The Leviathan partnerships are moving forward with their plans, and there are no delays in the project to supply natural gas to Israel in 2019." 

Published by Globes [online], Israel Business News - www.globes-online.com - on February 9, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Leviathan drilling photo: Channel 10
Leviathan drilling photo: Channel 10
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