U.S. company Noble Energy and Israel’s Delek, and Egypt’s EGAS are nearing the completion of the acquisition of a gas pipeline linking Israel and Egypt, which will serve as a transport route for gas from Israel’s Tamar and Leviathan offshore gas fields to Egypt.
The group in September last year agreed to buy the stake in the East Mediterranean Gas company registered in Egypt which owns a 26 inch, c. 90 km subsea pipeline – the EMG Pipeline – connecting the Israeli transmission system in the Ashkelon area with the Egyptian transmission system in the El-Arish area, as well as related facilities. The transaction value was set at $518 million.
The pipeline was designed for a capacity of approx. 7 BCM per year, with an option to increase the capacity to approximately 9 BCM per year by installing additional systems.
The flow of gas through the EMG Pipeline from Egypt to Israel was stopped several years ago, has no commercial activity. This is soon about to change as Delek on Sunday said all conditions have been met to complete the EMG transaction and the full amount to be paid has been transferred to the escrow agents. Also, the purchased EMG shares were transferred to EMED, a company jointly owned by Noble, Delek, and EGAS.
“Upon the transfer of the full amount of the consideration from the escrow agents to the sellers, which is expected to be performed in the coming days, the EMG transaction will be closed,” Delek said Sunday.
Delek has estimated that the EMG Pipeline and the Egyptian transmission system will be fit for the commercial transport of gas on the date of start of the obligation of the Leviathan field partners to supply natural gas as agreed with Egypt’s Dolphinus.
To remind, partners in Noble Energy-operated Leviathan and Tamar gas fields offshore Israel have recently signed revised agreements for the supply of gas to Egypt’s Dolphinus Energy, whereby the Egyptian company agreed to buy more than 85 BCM of gas from the Leviathan and Tamar partners.
Under the amended agreement, signed on September 26, Dolphinus will buy around 60 BCM of natural gas from the Leviathan field. This is a significant increase compared to 32 BCM stipulated under the original agreement.
The Leviathan gas supply to Dolphinus will start on January 1, 2020, and will continue until December 31, 2034, or until the supply of the full contractual quantity, whichever is earlier. The giant gas field is expected to start production later this year.
While the volume of gas to be sold from the Leviathan to Dolphinus has increased, the Tamar volumes have been reduced from the original agreements signed last year. Under the revised deal, Dolphinus will buy 25,3BCM, down from 32,3 BCM envisioned by the original agreement. Tamar partners will supply gas to Dolphinus starting June 30, 2020, until December 31, 2034.
Offshore Energy Today Staff
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