Energean to sign first Karish gas deal


Or Energy will buy 0.5 billion cubic meters of gas per year for a new power plant it is building in southern Israel.

Energean, the Greek energy company, which holds the rights to the Karish and Tanin offshore Israeli gas fields, is set to announce its first natural gas deal on Sunday for the Karish field. The deal is with Or Energy and its sister company Dalia Power Energies Ltd., which own Israel's largest private power plant at Tzafit near Kibbutz Kfar Menahem east of Kiryat Malakhi. Or plans building a second power station at Tzafit, which will produce 800 megawatt of electricity.

The full details of Energean's deal are not yet known but it would appear to be a deal that will complement the one that Or Energy signed with the Leviathan partners at the end of 2016 to provide 8.8 billion cubic meters (BCM) of natural gas over 20 years for $4.7 per thermal unit for a total deal worth $1.5 billion. The price that Or Energy is paying for the Karish gas is expected to be slightly lower than the Leviathan deal, probably around $4.5 per thermal unit for about 0.5 BCM per year.

According to details reported by Leviathan partner Delek Group Ltd. (TASE: DLEKG) at the time of the Or Energy deal, the buyer was entitled to reduce the amount of gas it was purchasing by 50% within four years of the approval of Energean as the owner of the Karish and Tanin fields. Energean received such approval in December 2016, and this clause could have a major impact on the amount of gas that Or will buy from Karish.

Published by Globes [online], Israel business news - www.globes-online.com - on May 26, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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