Delek Group announced the agreement signed by the Tamar Project partners, including the Partnerships (Delek Drilling Limited Partnership and Avner Oil Exploration Limited Partnership), and Dolphinus Holdings Limited for the export of natural gas from the Tamar Project to Egypt.
Further to the Partnerships’ Immediate Report of October 19, 2014 regarding the letter of intent for the export of natural gas from the Tamar Project to Egypt, notice is hereby given that on March 17, 2015 the Tamar Project partners, including the Partnerships (the “Tamar Partners”) signed a contract for the export of natural gas (the “Contract”) to Dolphinus Holdings Limited (the “Buyer”).
The volume of natural gas that will be exported to the Buyer under the contract is expected to be based on the volume of surplus gas available to the Tamar Partners from the Tamar Project, on an interruptible basis, over a period of 7 years. The contract provides that the Tamar Partners will offer to supply the Buyer a minimum cumulative volume of 5 BCM (billion cubic meters) (“Minimum Cumulative Volume”) for the first 3 years of the contract, subject to the daily limit of up to 250,000 MMBtu per day and to supply limitations of Israel Gas Lines Ltd. (“IGL”).
The Buyer will be responsible for transporting the gas from Ashkelon to Egypt via the existing gas pipeline operated by the East Mediterranean Gas Company (“EMG Pipeline”).
So long as supply will be on an interruptible basis the Buyer will not be obliged to purchase minimum volume, however the Tamar Partners estimate that the Buyer will consume a substantial part of the foregoing Minimum Cumulative Volume. It was further stipulated that should the parties agree in the future that the gas supply will be on a binding basis, then the Buyer will be obliged to purchase minimum volumes, based on a mechanism set out in the contract.
The price of gas as fixed in the contract is similar to the prices set in other contracts for the export of gas from Israel and is essentially based on linkage to price per barrel of Brent oil and includes a minimum price.
The contract also provides that the Tamar Partners will have first refusal rights over any volume of natural gas that the Buyer will request to import from Israel to Egypt via the EMG Pipeline, and the Tamar Partners will not sell and pipe additional volumes of natural gas from the Tamar Project to Egypt via the EMG Pipeline without the consent of the Buyer, all in accordance with the terms set in the contract.
The contract includes several preconditions, mainly obtaining the required regulatory authorizations from the authorities in Israel (including an export permit), signing of a transporting agreement between the Tamar Partners and IGL, obtaining the required regulatory approvals from the authorities in Egypt and signing of a transporting agreement between the Buyer and EMG, enabling the gas to be piped to Egypt via the EMG pipeline.
The Tamar Partners intend acting to obtain an export permit for the volumes that will be sold to the Buyer, under the quota of natural gas permitted for export to neighboring countries as prescribed in Government Resolution No. 442 of June 23, 2013.
To the best of the Partnerships’ knowledge, the Buyer represents a consortium of major Egyptian non-government industrial and commercial gas consumers, gas distributors and entrepreneurs, headed by Dr. Alla Arfe.
The Tamar Partners estimate that the cumulative revenues from the sale of the minimum cumulative volume to the Buyer (compared with 100% of the Tamar Project) could amount to USD 1.2 billion, based on the Buyer consuming the minimum cumulative volume and on the Tamar Partners’ estimate regarding the price of natural gas during the term of the contract. It is hereby clarified that the actual revenue will be derived from a range of factors, including the actual volume of gas that will be purchased by the Buyer and the Brent price at time of sale.
(Delek Group Press Release)