Sources inform "Globes" that Israel Electric Corporation (IEC) (TASE: ELEC.B22) want to significantly increase the quantity of natural gas that it will purchase from the country's suppliers. Consequently, it will raise the value of its deal with the partners that own the Tamar gas field by billions of dollars.
In January 2010, a letter of intent was signed between IEC and the Tamar partners to supply 2.7 billion cubic meters of gas for $9.5 billion.
It was recently published that the Tamar partners want to want to change the mechanism by which the price of gas is updated in such a way as to make the deal far more expensive. It also seems that IEC want to increase their gas purchases from 2.7 billion cubic meters to 4.5-5 billion cubic meters.
The reason for the increase is reportedly in no way related to the problems of gas supply from Egypt's EMG but stems rather a strategic decision to increase use of natural gas in producing electricity. One reason has been the recent sharp increase in the price of coal on global markets.
IEC chairman Yiftah Ron-Tal pulled a surprise just last week when he said for the first time that IEC wants to double the proportion of natural gas it uses to produce electricity from 40% to 80%.
The Tamar field is owned by Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Alon Natural Gas Exploration Ltd. (TASE: ALGS),
Published by Globes, Israel business news - www.globes-online.com - on February 27, 2011
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