Investors in Israeli Natural Gas Agree Supply Deal With Jordan
September 26 2016 - 11:49AM
Dow Jones News
By Rory Jones
TEL AVIV -- Investors in Israel's largest natural gas field on
Monday agreed with Jordan's national power company to supply it
with gas worth up to $10 billion, in a deal that could jump-start
Israeli hydrocarbon exports.
Houston's Noble Energy Inc. and its partners in the Leviathan
gas field will supply Amman-based National Electric Power Co. with
1.6 trillion cubic feet of gas over 15 years, the company said.
Leviathan is the largest natural gas reserve in Israeli waters
and the country's officials hope development of the field can spur
regional exports and deepen economic and diplomatic ties with some
of its traditionally hostile neighbors such as Jordan, which has
few energy sources of its own.
Israel's Prime Minister Benjamin Netanyahu in May approved
amended terms for development of Leviathan after months of legal
wrangling that had stunted the growth of the domestic hydrocarbon
industry.
Israel's highest court in March ruled against an initial
framework to develop the country's offshore fields. It called the
deal unconstitutional, citing a clause that gave energy companies
pricing and regulatory stability for 10 years regardless of
potential shifts in the government or its policies.
Noble is the largest stakeholder in the Leviathan field, which
has an estimated 22 trillion cubic feet of gas, or enough to supply
Israel for 100 years. Other interest owners are Israeli companies
Delek Drilling LP, Avner Oil Exploration LP and Ratio Oil
Exploration LP.
The firms in 2014 signed a letter of intent to sell roughly 1.6
trillion cubic feet of natural gas to Jordan's National Electric
Power Co. over 15 years from Leviathan.
The deal and development of Leviathan, however, was impacted by
the internal legal and regulatory hurdles in Israel, delaying
completion of talks between Israeli and Jordanian officials.
Noble now expects to deliver its first gas from the field in
2019 or 2020, it said.
The Leviathan group and Israeli officials also have held talks
for larger export contracts with companies in Egypt and Turkey,
although the discussions have hit obstacles.
Egypt froze plans last year to import Israeli gas after an
international arbiter ruled that the North African country's
state-owned energy companies owed $1.76 billion to state-owned
Israel Electric Corp., or IEC, demanding that Israel drop this and
another arbitration case over gas.
Israel signed peace agreements with Egypt in 1979 and Jordan in
1994, and the countries now coordinate extensively on security
issues.
But conducting business with Israel has proved divisive in the
Middle East. Economic ties with both Egypt and Jordan have failed
to grow significantly, despite the peace treaties.
Jordan has no proven and exploitable oil and gas reserves. It
has long relied on Egypt for imports of gas, but supplies have
become erratic since the Arab Spring in 2011 when militants in the
Sinai Peninsula began attacking a pipeline between the two
countries.
Amid the disruptions and rising domestic energy demand, Jordan
has increasingly sought alternative supplies.
Noble Energy also owns a stake in one of Israel's smaller
fields, Tamar, which is already producing gas.
The Houston firm signed an agreement in 2014 with Jordan Bromine
Company and the Arab Potash Company, both based in Amman, for
exports from Tamar. Delivery of that gas will begin in late 2016,
Noble said Monday.
Write to Rory Jones at rory.jones@wsj.com
(END) Dow Jones Newswires
September 26, 2016 11:34 ET (15:34 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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