Three of Israel's main fuel companies - Delek Israel Fuel Corporation Ltd. (TASE: DLKIS), Sonol Israel Ltd,, and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) - will buy most of their refined fuel products this year from Oil Refineries Ltd. (TASE:ORL), controlled by Israel Corporation (TASE: ILCO) and Israel Petrochemical Enterprises Ltd. (TASE:PTCH).
Alon Israel Oil Company Ltd. subsidiary, Dor Alon, controlled by David Weissman, has already signed a one-year contract with Oil Refineries. Delek Israel, a subsidiary of Yitzhak Tshuva's Delek Group Ltd. (TASE: DLEKG), and Sonol, owned by David Azrieli through Granite Hacarmel Investments Ltd. (TASE: GRNT), are expected to follow suit.
Energy market sources said that the fuel companies will probably buy fuel at similar terms as in 2008; i.e. at less than international market prices. However, the companies will probably buy less fuel than last year because the companies built up their inventories in 2008 in anticipation of higher prices.
The fuel companies also expect that the slowdown will reduce sales in 2009, and they reduced their monthly fuel orders accordingly.
In recent months, the fuel companies had been in talks to import fuel products, especially from Indian refineries Essar Oil Ltd. and Reliance Industries Ltd., which are interested in Israel's fuel market. However, it turned out during the talks that Indian fuel would not be available before the second half of 2009.
Paz Oil Company Ltd. (TASE:PZOL), Israel's other large fuel company controlled by Zadik Bino, owns its own refinery, Paz Ashdod Refinery Ltd.
Oil Refineries' share rose 3.7% by midday today to NIS 1.02.
Published by Globes [online], Israel business news - www.globes-online.com - on January 4, 2009
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