The government's policy regarding the purchase of natural gas from the natural gas reserves of BG Group plc (NYSE: BRG: LSE: BG) located offshore from Gaza is continuing to zigzag. Sources inform ''Globes'' that the ministerial committee for legislation is due to discuss today an amendment to the Natural Gas Law to allow the state or a government company to market and sell natural gas.
The Ministry of Finance and the Ministry of National Infrastructures formulated the amendment in response an appeal filed with the Supreme Court regarding the negotiations with BG Group in which the government promised not to buy natural gas from the company until the amendment was passed. The amendment is a precondition for a contract, which is estimated to be worth $3-4 billion, with the company,.
The ministerial committee for legislation will discuss the issue even though Prime Minister Ehud Olmert recently instructed that only private consumers, and not the government, would hold negotiations with BG Group. That order was given following the latest crisis in the talks between the government and the company. Energy market sources said that it was a good thing that the government remembered to amend the law, but added that it may be too little, too late.
BG Group obtained the 90% of the Gaza natural gas concession from the Palestinian Authority, which owns the other 10%.
In a separate development, BG Group and Ofer Brothers subsidiary Israel Corp. (TASE: ILCO) strongly deny reports that Israel Corp. is in talks to acquired BG's stake in the concession. Sources at BG said that the company was not holding talks with anyone to sell the concession.
Israel Corp. said in response that reports were baseless and that it was not seeking to acquire the concession.
Natural gas market sources added that Israel Corp. has been in talks to buy $1 billion worth of natural gas from East Mediterranean Gas Company (EMG) for Israel Corp.'s factories. The sources added that Israel Corp. may want to pressure EMG on the price in these negotiations. Yossi Maiman is a 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-online.com - on May 11, 2008
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