Financially-strapped Israel Electric Corp (IEC) signed a deal on Sunday to buy as much as $23 billion of natural gas from a US-Israeli group developing the large Tamar gas field off Israel's Mediterranean coast. The deal was signed after numerous delays due to regulatory and governmental objections over the need to prevent Tamar from becoming a monopoly and preventing other players from getting contracts in Israel.
A group led by Texas-based Noble Energy is developing the Tamar prospect. Noble holds 36 percent of Tamar. Isramco Negev owns 28.75 percent, Avner Oil Exploration and Delek Drilling hold 15.625 percent each and Dor Gas Exploration has a 4 percent stake.
Tamar, with estimated gas reserves of 9.7 trillion cubic feet, was one of the world's largest offshore discoveries in recent years and is expected to start producing natural gas in mid-2013.
Under the 15-year agreement, IEC will buy a minimum of 43 billion cubic meters of gas with an option of reaching 99 BCM. A spokesman for Delek and Avner said the price will be around $5.04 per Million Metric British Thermal Units. IEC, Israel's only electric utility, would buy at least 3.5 BCMs a year in the first five years and another 2.5 BCMs a year in the next 10 years.