JERUSALEM (Dow Jones)
The Israeli partners in the offshore Tamar natural gas field said Thursday that they have signed a letter of intent to sell liquefied natural gas, or LNG, to a unit of Russian energy giant OAO Gazprom (GAZP.RS).
The partners, which include Delek Group Ltd. (DLEKG.TV) subsidiaries Avner Oil Exploration (AVNR.L.TV) and Delek Drilling LP (DEDR.L.TV) , said it would discuss selling 2 million-3 million metric tons of LNG a year to Gazprom for 20 years, beginning 2017. The partners said the price would be based on the market price of natural gas in Asia.
Yaron Zar, analyst at Clal Finance Ltd. in Tel Aviv, said that a deal with Gazprom would likely give the Tamar partners $1 billion in additional annual revenue.
The Tamar underwater field contains an estimated 9 trillion cubic feet of natural gas and is scheduled to begin production next year.
Tamar made a recent agreement with South Korea's Daewoo Shipbuilding & Marine Engineering Co. Ltd. (042660.SE) to build the necessary infrastructure and storage units to produce LNG. Clal Finance's Zar said that the agreement with Gazprom is likely to speed up Daewoo's work and ensure production begins.
The Tamar partners have already signed several contracts to supply Israeli-based customers, including the state-owned electric company, with natural gas once production begins. Avner and Delek Drilling said a contract with Gazprom wouldn't limit its ability to meet Israel's natural gas needs.
At 1312GMT, shares of Delek Drilling were up 0.15 shekels, or 1.08%, at ILS14.00 ($3.71), and shares of Avner were up ILS0.08, or 0.32%, at ILS2.513, in a lower Tel Aviv market.
U.S.-based Noble Energy Inc. (NBL) owns 36% of Tamar.
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