The partners in the Leviathan natural gas field, offshore Israel, signed a deal to sell about $1.3 billion worth of gas over 18 years to Edeltech Group,
Israel’s largest private power producer, owned by the Edelsburg family, and its Turkish partner for power plants they plan to build in Israel. The tow companies have already partnered in the Dorad Energy plant as well as the Ashdod and Ramat Negev cogeneration plants.
The Leviathan partners said today 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: Tamar (140 MW) in the Haifa Chemicals plant in the Rotem Plain, and the Solad (77MW) power station at the CHS plant in Ashdod. The power stations will together produce over 1, 250 MW of electricity from natural gas, representing 10 percent of the power demand in the Israeli economy.
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.
This is the first sale contract in Israel for the partners in Leviathan (Delek Drilling 22.67 percent, Avner Oil & Gas 22.67 percent, Noble Energy 39.66 percent, and Ratio 15 percent), and it follows memoranda of understanding signed by the partners last year for the supply of gas to customers in Egypt and Jordan.