Leviathan partners to sell $1.3 bln in gas for Israel power plants

TEL AVIV - Reuters

AFP Photo

The partners in the Leviathan natural gas find off Israel’s Mediterranean coast signed a deal to sell about $1.3 billion worth of gas over 18 years to Edeltech Group and its Turkish partner for power plants they plan to build in Israel.

The Leviathan partners said on Jan. 31 they committed to supplying a total of 6 billion cubic meters of gas. Edeltech and Zorlu Enerji will be able to adjust the quantity they buy until the date they begin to receive gas in accordance with the size of the plants they build.

The price to be paid will be linked to the cost of electricity production as set by the electricity regulator.

The $1.3 billion estimate is based on Edeltech and Zorlu acquiring the maximum amount set out in the contract.

The privately owned Edeltech and Zorlu are planning to build two new plants in Israel. They have already partnered in the Dorad Energy plant as well as the Ashdod and Ramat Negev cogeneration plants.

Texas-based Noble Energy and Israel’s Delek Group control the Leviathan field as well as the smaller Tamar field.

Last month, after years of political infighting Israeli Prime Minister Benjamin Netanyahu signed a deal giving long-awaited approval for the development of Leviathan.

With estimated reserves of 622 billion cubic meters, Leviathan will cost at least $6 billion to develop. It is meant to begin production in 2018-2020, although that timetable looks ambitious, and supply billions of dollars’ worth of gas to Egypt and Jordan, and possibly Turkey and Europe.