Tamar partners extend Union Fenosa talks

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The talks involve the sale of 79 BCM of natural gas over 15 years from Egypt’s Damietta installation.

 

The Tamar natural gas partners reported to the Tel Aviv Stock Exchange (TASE) that they intend to extend negotiations with Spanish company Union Fenosa Gas, which has a natural gas liquefying facility in Damietta, Egypt. The negotiations concern the sale of 70 billion cubic meters of gas over 15 years.

The Tamar partnership announced on May 5 that the parties had signed a five-month letter of intent designed to lead to the signing of a binding agreement. The partners have now extended the negotiating period.

Union Fenosa’s Damietta facility closed down in 2012, after the Egyptian government decided to use the gas for internal needs.

British Gas (BG) has a gas liquefying facility in Idku, Egypt. Natural gas shortages in Egypt prevented both companies from fulfilling their obligations to their customers in the international markets, causing the two companies huge damages.

As a result, Union Fenosa sued the Egyptian government last year, claiming that Egypt had violated the agreement between the two, thereby causing Union Fenosa large-scale financial damages. Egypt owes $5.9 billion to foreign oil and gas companies that invested in Egypt.

Last September, however, an international press agency reported that Union Fenosa was considering withdrawing its lawsuit against Egypt if Egypt allows it to import Israeli gas to its Damietta liquefying facility.

The agency’s website also stated that gas from the Tamar reservoir could be sent to the Damietta facility through an undersea pipeline, thereby “rescuing” the facility, which has stood idle for two years, while costing Union Fenosa enormous sums daily.

Noble Energy Inc. (NYSE: NBL) holds a 36% stake in Tamar. Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L)(28.75%) Delek Group Ltd. (TASE: DLEKG) units Delek Drilling Limited Partnership (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L) (each hold 15.625%) and Alon Natural Gas Exploration Ltd. hold 4%.

Published by Globes [online], Israel business news – www.globes-online.com

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