Leviathan Partners Sign $3 Billion Israeli Natural Gas Supply Deal

May 29, 2016, 3:08 PM UTC
Mideast Israel Gas Bonanza
In this undated aerial photo made available by Albatross Aerial Perspective shows an aerial the Tamar Lease natural gas rig, located 90km west of the city of Haifa, northern Israel. Israel is putting together a plan for a national investment fund that would put to work an anticipated natural gas bonanza to fuel both an export-geared economy and provide a nest egg of 10 billion US dollars in under a decade for future generations.(AP Photo/Albatross Aerial Perspective)
Photograph by AP

The partners in Israel’s Leviathan natural gas field said on Sunday they had signed a deal to supply as much as $3 billion worth of gas to a new private power plant in central Israel.

Leviathan, one of the largest offshore discoveries of the past decade, was found off Israel’s Mediterranean coast in 2010. It has an estimated 622 cubic meters of natural gas (BCM) of reserves and is expected to become operational in 2019.

Under the deal, Leviathan will provide up to 13 billion BCM for 18 years to the IPM plant in Be’er Tuvia once gas starts flowing from Leviathan.

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The contract comes a week after Israel’s government approved a revised deal aimed at fast-tracking development of the huge field, which has been mostly earmarked for exports.

In January Leviathan signed a $1.3 billion gas supply contract with Edeltech, Israel’s largest private power producer.

Texas-based Noble Energy (NBL), Israeli conglomerate Delek Group, and Israel’s Ratio Oil Exploration own the Leviathan site, which will cost more than $5 billion to develop.

“This deal is an important milestone, in that it establishes another domestic contract that, together with additional domestic and export contracts, are essential for the quick development of Leviathan,” said Niv Sarne, Noble’s manager of business development.

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The Leviathan project hit a major obstacle in March when Israel’s Supreme Court blocked a previous agreement between the field’s shareholders and the Israeli state, the terms of which would have stayed unchanged for 10 years.

It had been opposed by opposition parties and public advocacy groups on grounds that Noble and Delek—which also own the adjacent Tamar field—would control too much of Israel’s natural gas supply.

The ruling will allow the government to change taxes, export quotas or other regulations in connection with the Leviathan field.

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