BP to sell LNG to Israel - report

According to an international trade periodical, BP is set to win IEC's liquefied natural gas tender.

22 July 12 10:38, Amiram Barkat

Trade magazine "LNG Unlimited" reports that BP plc (LSE; NYSE: BP) is set to win Israel Electric Corporation's (IEC) (TASE: ELEC.B22) liquefied natural gas (LNG) purchase tender, beating Russia's Gazprom (RTS: OGZD; LSE; GAZP; DAX: GAZ), and Italy's ENI SpA (BIT: ENI; NYSE: E). The price of the LNG was not specified.

Under terms of the tender, BP will begin LNG deliveries on December 1 for six months, making two deliveries a month, amounting to a total of 0.15 billion billion cubic meters of natural gas. BP has an option to make six more deliveries.

Each delivery will total 130,000 cubic meters of gas, which BP will load in Cyprus onto a floating storage and regasification vessel (FSRU) owned by Excelerate Energy Inc. of the US, which will berth at the floating LNG buoy in Israel.

Israel Natural Gas Lines Ltd. is building the buoy 12 kilometers offshore from the coal terminal of IEC's Orot Rabin Power Station at Hadera, at a cost of NIS 500 million.

From the buoy, the gas will flow to Israel's national gas pipeline network. The LNG imports are due to supplement Israel's domestic natural gas sources, but the economic worthwhileness of the imports is dubious. "Globes" revealed that the quotes submitted to IEC in the RFP were $18-20 per million BTU, 3-4 times the price that IEC has committed to paying for the natural gas that it will buy from the Tamar field.

Published by Globes [online], Israel business news - www.globes-online.com - on July 22, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012