IEC was surprised; the government recently ordered it to resume talks with BG Group.
Sources inform ''Globes'' that Ministry of National Infrastructures director general Hezi Kugler last week instructed Israel Electric Corporation (IEC) (TASE: ELEC.B22) to double its purchases of natural gas from Egypt's East Mediterranean Gas Co. (EMG), despite disruptions in supplies and disagreements over price. Kugler instructed IEC to immediately resume negotiations to buy at least 2-3 million cubic meters of natural gas a year, without tender.
In a letter to IEC chairman Motti Friedman and CEO Amos Lasker, Kugler said that he wanted regular updates on progress in the negotiations and summaries between IEC and EMG.
The Ministry of National Infrastructures believes that, beginning in 2010, IEC will need to buy $600-800 million a year worth of natural gas in order to meet demand under the company's emergency development plan. At current natural gas prices, this means a contract amounting to $3-4 billion. The ministry's decision took IEC by surprise, since the government recently ordered it to resume negotiations with BG Group plc (NYSE: BRG; LSE: BG) to buy natural gas from its reserves offshore from Gaza.
Published by Globes [online], Israel business news - www.globes-online.com - on December 2, 2008
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