Three natural gas contracts will be signed in the coming days between the Tamar partners and private power stations, sources inform "Globes." The power stations concerned are Alon Tabor, Ramat Gabriel and the power plant due to be built in the Sorek desalination plant.
In 2014, the Tamar partners signed contracts to supply natural gas to three power stations but in January, the Public Utilities Authority (Electricity), which regulates the electricity sector, said that it refused to recognize them. This was because the basic price in the contracts was too high, and that its linkage would bring about an unjustified rise in the price of gas bought by the private power plant developers. The mechanism for linking the price of contracts was meant to be similar to the contract signed by the Israel Electric Corporation (IEC) (TASE: ELEC.B22) linked to the Israeli and US Consumer Price Indices (CPI) plus 1% for eight years, and after eight years linked to the CPI minus 1%.
Today, sources inform "Globes" that the Tamar partners, Ministry of Finance and private power plant developers have reached an agreement and contracts will be signed in the coming days. The basic price of the contracts will be $5.85, linked to IEC's production component. This is similar to the contracts signed by the Tamar partners with Dalia, Dorad and OPC, and to medium sized plants belonging to Paz, Hadera Paper and Nesher.
This linkage will allow the private plant producers to remain competitive and is a mechanism acceptable worldwide.
The Tamar partners are Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling Limited Partnership (TASE: DEDR.L) (15.625% each), Noble Energy Inc. (NYSE: NBL) (36%), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) (28.75%), and Alon Natural Gas Exploration Ltd. (TASE: ALGS) (4%).
Published by Globes [online], Israel business news - www.globes-online.com - on March 24, 2015
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