Deal envisions Leviathan gas sales to Egypt

Partners in giant undeveloped Leviathan natural gas field offshore Israel have signed a nonbinding letter of intent to sell gas to Dolphinus Holdings Ltd. of Egypt in a deal that would make use of the idle Arish-Ashkelon pipeline, according to one of the partners.

Delek Group, which holds 44.34% of the Leviathan project through two subsidiaries, said the agreement would cover 4 billion cu m/year for 10-15 years. Other Leviathan interests are Noble Energy Mediterranean Ltd. 39.66% and Ratio Oil Exploration (1992) LP 15%.

The deal envisions delivery of Leviathan gas via the Israel Natural Gas Lines Ltd. transmission system to a connection with the idle pipeline at Ashkelon.

The East Mediterranean Gas Ltd. (EMG) group owns the Arish-Ashkelon pipeline, which once served as a spur from the Egyptian segment of Arab Gas Pipeline for delivery of gas to Israel but has been idle since 2011 because of sabotage of the main line.

In March, an announcement by Delek about a comparable deal based on gas from producing Tamar field off Israel elicited a disclaimer from a lawyer representing EMG, who said the pipeline company wasn’t part of the agreement and who questioned the economics of system reversal (OGJ Online, Mar. 23, 2015).

Delek said the Leviathan gas deal would operate in addition to the proposed Tamar transaction. It listed among conditions that must be met for completion of the Leviathan deal approval of the Leviathan development plan, “signing of a transmission agreement between the buyer and EMG that will facilitate the transmission of gas to Egypt using the EMG pipeline,” and approvals by Israeli and Egyptian authorities.

Delek described Dolphinus Holdings, also the buyer in the Tamar deal, as “a consortium of major Egyptian nongovernmental industrial and commercial gas consumers, gas distributors, and entrepreneurs.”

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