The Tamar partners have signed a non-binding letter-of-intent to sell gas worth $19.5 billion to the Spanish company.
The Tamar partners will sell natural gas to the Spanish company Union Fenosa Gas SA, which owns a gas export installation in Egypt, according to a non-binding letter of intent signed by both parties. The Tamar partners announced that they are targeting a binding agreement within six months. The deal will be worth $1.3 billion annually over 15 years for a total of $19.5 billion.
The Tamar partners initially reported the talks with Union Fenosa in their 2013 annual statements.
The Tamar natural gas field partners are Noble Energy Inc. (NYSE: NBL) (36%), Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) (15.65%) and Delek Drilling Limited Partnership (TASE: DEDR.L) (15.65%), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and Alon Natural Gas Exploration Ltd. (TASE: ALGS (4%).
Under the terms of the agreement, the gas will be supplied to the Israel Egyptian border from where it will be linked up to Union Fenosa's gas export installation in Egyptian waters. The price for the natural gas sold will be similar to the contract price in other natural gas sales and purchase agreements for regional export sales from Israel and is based mainly on a linkage to Brent oil prices.
Noble Energy Senior VP Eastern Mediterranean Keith Elliott said "This LOI with Union Fenosa Gas represents a major milestone for our Tamar asset and is indicative of the strong regional demand for natural gas. The associated expansion of the Tamar field facilities, subject to final investment decision of the Tamar partners, will not only enable substantial regional exports, but it will also increase the capacity for natural gas deliveries to Israel's domestic market."
He added, "Building on the recent agreements with the Palestinian Power Generation Company, as well as the Arab Potash and Jordan Bromine Companies, this agreement continues to demonstrate our ability to accelerate value and strengthen economic growth for stakeholders across the Eastern Mediterranean region."
The Tamar field including SW Tamar contains 10 trillion cubic feet (TCF) of gas and this deal encompasses a total of 2.5 TCF.
The signing of the letter-of-intent comes several days before Delek Drilling, Avner and Alon Natural Gas attempt to raise $2 billion in a bond from Israeli, US, and European institutional investors to recycle current debt and partly finance development of the Leviathan field.