Israel Electric Corporation (IEC) (TASE: ELEC.B22) is on the verge of signing a natural gas supply contract between and the Tamar partners - Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), and Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L). A source told ''Globes'' that a deal would be signed by the end of December at the latest, while another source cited an even earlier date.
Sources monitoring the talks told "Globes" that the key issues, including the amount of gas and the price, have been settled, and only insubstantial issues, mostly legal technicalities, are holding up the submission of the contract to IEC's board of directors for approval.
The 15-year gas supply contract could be worth $20 billion, with the parties agreeing on a price of $5.50 per million British Thermal Units (BTU). The price cited in the letter of intent from January 2010 was $4.50 per million BTU, equivalent to $5.20 per million BTU in current prices.
Delek Group and Alon Natural Gas Exploration Ltd. (TASE: ALGS), which together own 36% of Tamar, need the IEC contract to secure bank financing for their share of the development costs of the gas field. The IEC contract should also pave the way to contracts with other, smaller, customers, such as private power producer Dalia Energies Ltd., which cannot secure financing to build its power station until it has a gas supply contract.
Published by Globes [online], Israel business news - www.globes-online.com - on November 30, 2011
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