Delek: Talks with Union Fenosa continue


Delek has rubbished an Egyptian media report that UFG's partner ENI, instead of the Tamar partners, will export gas to the Al Shorouk liquefaction plant.

Delek Group Ltd's. (TASE: DLEKG) natural gas exploration and production units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) issued a clarification this morning, that talks continue with Union Fenosa Group (UFG) which co-owns a gas liquefaction plant in Egypt together with Italian company ENI. This clarification follows a report in Egypt's Daily News website that ENI, which owns 60% of the Al-Shorouk gas field, is to lay a pipeline to the liquefaction facility and export 8.2 BCM of gas. The report would apparently undermine the possibility that the Tamar partners would export gas to the liquefaction facility.

The announcement said that the report in their 2015 annual statement about the signing of a binding letter of intent (LoI) on gas exports to the liquefaction facility, is still valid, and talks between the parties continue. "As for the media reports, the partners seek to clarify that contrary to the implications of these reports, and following clarifications received from UFG, the parties continue with ongoing negotiations aimed at reaching a binding agreement for natural gas supply from the Tamar project to UFG's existing liquefaction facilities in Egypt."

The tentative agreement on exports to the liquefaction facilities was put 'on ice' by the Egyptian government exactly one year ago, as a means of pressuring Israel to waive its demand for the a $1.8 billion compensation to Israel Electric Corporation (IEC) (TASE: ELEC.B22) for the halt in gas supply in 2011. Arbitration between the parties has been continuing for almost four years.

Exports to Egypt were one of the arguments for the approval of the gas outline agreement as part of the Economic Arrangements Law article 52, which provides an exemption from some or all limitations on a monopoly, based on foreign policy or national security considerations.

Following this report, Ministry of National Infrastructures, Energy and Water Resources Director-General Shaul Meridor said this morning, "the gas outline agreement is alive and kicking and everything we see these days is a beneficial result of the agreement."

Meridor spoke at the Israeli Institute of Energy and Environment Energy Market Forecast Conference, "Since the agreement has been finally approval we are only seeing processes moving it forward. For the first time in three years, the Tamar 8 drilling is being conducted, aimed at increasing output in Tamar. Yesterday, the Leviathan partnerships announced that they will start the Leviathan 5 drilling in February. This means that the market is moving forward. This would not have happened without the outline agreement.

"Almost all of the financing agreements have been signed, work with us, as a regulator, is progressing at a satisfactory pace, there are building permits for the rig and we see things progressing. Last week, the minister approved the sale of Karish and Tanin to the Greek company Energean and all of these developments are due to the outline agreement. The same is true for the international process to open the sea for natural gas and oil exportation, a process that will lead to the discovery of further fields."

Meridor presented the energy market policy for the next years, including measurable Ministry of Energy objectives and goals. He talked about the energy market master plan, part of which will be opened to the public in 2017, energy sources' diversification, the tender to generate over 1000 mW from renewable energy sources, and the goals to the integrate natural gas into Israel's industry and car market.

Published by Globes [online], Israel business news - - on December 19, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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