Sources inform “Globes” that Yam Thetis, controlled by Delek Group (TASE:DLEKG), will have to compensate Israel Electric Corporation (IEC) if the natural gas does not begin to flow on January 1, 2004, as stipulated in its contract with IEC.
The amount of compensation is linked to the length of the delay. Sources familiar with the subject say the compensation could reach $20 million in the event of a protracted delay.
Two weeks ago, Minister of National Infrastructures Joseph Paritzky decided to postpone approval of Yam Thetis's natural gas pipeline from its fields offshore from Ashkelon to the IEC receiving station on shore 30 km away. The natural gas would go from there to the IEC power station in Ashdod.
Paritzky said he was postponing approval because the pipeline had not been built according to the required Dutch standard set by NV Nederlandse Gasunie. Yam Thetis protested, but the Ministry of National Infrastructures still refuses to approve the pipeline, and it is not clear when the final approval will be given.
The natural gas was due to begin flowing yesterday, at a ceremony with Prime Minister Ariel Sharon and Paritzky, but was postponed because the pipeline has not been approved for operations.
Paritzky today said the pipeline had not yet been approved. "I have no idea when it will be approved. Our team, headed by Ministry of National Infrastructures director-general Eli Ronen, is studying the matter."
At an angry meeting between Paritzky and Yam Thetis representatives last night, Delek Group CEO Gabriel Last said due to the delays in approving the pipeline, "the banks are going to kill us." Banks are financing most of the construction of the national natural gas pipeline project, at a cost of hundreds of millions of dollars. The pipeline is only a few million dollars, but the entire project is now delayed.
Nobel Energy international operations manager Rodney D. Cook told Paritzky, "The behavior of the Ministry of National Infrastructures is liable to seriously damage US-Israel relations. If necessary, we'll involve Vice President Richard Cheney, who is very interested in promoting the project."
Published by Globes [online] - www.globes.co.il - on December 17, 2003