Tamar partners sign Gazprom LNG agreement

Under the letter of intent, the Tamar partners will export 4.2 BCM of gas a year to the Asian market for 20 years.

26 February 13 10:55, Amiram Barkat and Hillel Koren

The Tamar gas field partners today announced that they have signed a letter of intent for the export of liquefied natural gas (LNG). The main points of the agreement between Levant LNG Marketing Corporation (a special purpose company formed by South Korea's Daewoo Shipbuilding & Marine Engineering Co. Ltd. (KSX: 42660), which will build and operate the LNG facility, Norway's D&H Solutions AS, and Next Decade LLC), and a Swiss unit of Russian energy giant Gazprom JSC (RTS: GAZP; LSE: GAZD; DAX: GAZ) are as follows:

Noble Energy Inc. (NYSE: NBL) owns 36% of Tamar, Delek Group Ltd. (TASE: DLEKG) subsidiaries Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 15.625%, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) owns 28.7%, and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Alon Natural Gas Exploration Ltd. (TASE: ALGS) owns 4%. They have an option to become a partner in Levant LNG Marketing.

Exclusive negotiations between the parties over six months to sign a binding agreement for the export of gas to Asia;
The quantity of LNG exported will be 3 million tons per annum ( equal to 4.2 billion cubic meters a year) for 20 years at a FOB (free on board) price linked to the Brent crude price;
Gazprom will provide financial support for Levant to build the floating LNG (FLNG) facility through a large capital investment.

The Tamar partners added that the supply of natural gas to the FLNG should not affect the Tamar reservoir's ability to supply gas to the Israeli market. Gas deliveries to the FLNG will rely on a designated production network of new wellheads.

Delek Drilling chairman and Avner CEO Gideon Tadmor said, "Signing this letter of intent with Gazprom is not just a very important milestone for Tamar's FLNG project, but also a strategic collaboration with a major international player."

Delek Drilling CEO Yossi Abu said, "This is the first step in gas exports from Delek's gas discoveries and for the sale of LNG over 20 years to the Asian market, which is seeking new reliable sources for the supply of LNG. We will continue moving forward on detailed plans for the project ahead of making the final investment decision."

Published by Globes [online], Israel business news - www.globes-online.com - on February 26, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013