Management recommends increasing natural gas purchases by 25% a year.
Israel Electric Corporation (IEC) will probably exercise an option in its contract with Egypt’s East Mediterranean Gas Co. (EMG) to increase purchases of natural gas by 25%. The additional purchases will amount to hundreds of millions of shekels a year over the period of the contract. Sources inform ''Globes'' that IEC management recommended to the board to increase natural gas purchases from EMG immediately from the beginning of the contract.
EMG will supply IEC 1.7 billion cubic meters (BCM) of natural gas a year over 15 years. IEC has an option to either extend the contract period to 20 years or to increase the amount of gas it will purchase each year to 2.1-2.2 billion BCM.
Sources said that outgoing IEC CEO Uri Ben-Nun advised the board to exercise the option to increase gas purchases beginning in 2008-09. The additional gas purchases will cost up to $6 million a year, amounting to $600-800 million over the 15-year contract period to up to $2.7 billion altogether.
Israeli tycoon Joseph Maiman is a major shareholder in EMG through Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) and his private company Merhav MNF Ltd.
Published by Globes [online], Israel business news - www.globes.co.il - on August 21, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007