Wednesday, August 2, 2017

Dorad to buy Karish, Tanin gas for $500m - GLOBES

2 Aug, 2017 17:23
Amiram Barkat

Tanin, Karish owner Energean now has more than half the contracts needed to development the Israeli gas fields.

The board of directors of the Dorad power station, headed by chairman Erez Halfon, today approved the signing of a document of principles for the purchase of natural gas from the Karish and Tanin reservoirs, owned by Energean. 5.5 BCM of natural gas will be supplied over 14 years under the deal.

Market sources estimated the total value of the deal at over $500 million. The terms of the deal reflect an average price of $4 per heating unit, the lowest price in such deals in recent years. Supply in the deal is slated to begin in the fourth quarter of 2020, when gas from Karish and Tanin is expected to begin flowing.

Dorad's signature on an agreement for the supply of gas from the small reservoirs constitutes a further milestone towards development of the reservoirs and a transition to competition in the Israeli natural gas sector.

Development of the Karish reservoir will include the placing of a pipeline for carrying the gas from the reservoir through Israel's national natural gas carrying system. The investment in development of the Karish reservoir before the scheduled beginning of supply in 2020 is estimated at $1.3-1.5 billion. Development of the Tanin reservoir, which is scheduled later, will include drilling six wells to be connected to a floating production storage and offloading (FPSO) unit.

During the license period for the Karish and Tanin reservoirs, they are expected to supply the Israeli economy with 88 BCM of natural gas and 44 billion barrels of liquid hydrocarbons for export to regional and international markets. Energean group chairman and CEO Mathios Rigas previously announced that the condition for development of the reservoir was obtaining contracts for the sale of at least 3 BCM of gas annually. Before the Dorad agreement, the company had contracts for half of this amount.

Halfon said, "The signing is leading to certainty and reliability in supply, together with a low and attractive price. The agreement with Energean will enable Dorad to also prepare for the expansion of the electricity production apparatus and will give consumers an even more attractive price. The Dorad power station is responsible for generating competition in the electricity market, and we have naturally also been enlisted in the effort to encourage the small reservoirs and to create competition in the natural gas sector."

Dorad is owned by the Eilat Ashkelon Pipeline Company (EAPC) (37.5%), Zorlu Energy (25%), Dori Group Ltd. (TASE: DORI) (18.75%), and Adelcom (18.75%).

Published by Globes [online], Israel Business News - on August 2, 2017 - © Copyright of Globes Publisher Itonut (1983) Ltd. 2017