Greek Gas Transmission Operator Awaits Belgian Investors | Natural Gas Europe

December 19th, 2015 - Greek gas transmission system operator DESFA has announced its investment plans for the coming decade, while it waits for the entrance of the Belgium's Fluxys in its shareholder base.

To date, the planned privatisation of the Greek state company has not yet been formally completed. So far, any privatisation of the company has encountered regulatory hurdles. Although Azeri SOCAR bought a 66% of the company's shares back in mid-2013, the EU's competition authorities put the brakes on the formalisation of the deal, citing the third energy package. Now, after a series of negotiations, Belgian firm Fluxys has stepped in, seeking to buy at least 17% of the offerd shares, thus decreasing the Azeri majority in the company.

In the meantime, DESFA has progressed with its intentions to boosting the usage of gas in Greece. That includes upgrading the volume capacity of the Revythousa LNG terminal by 40%, as well as taking part in the establishment of the Vertical Corridor with Bulgaria, which will then traverse up to Romania and Hungary. Furthermore a set of new compressor stations are going to be built in the mainland along with new transmission connections to the LARKO nickel industrial complex, the ELPE oil refinery and an array of smaller lines that will connect smaller cities and communities in the mainland with gas.

Security, too, is going to be upgraded. New automation systems and new meter stations are in progress. Another project is to set up mini-LNG terminals to secure the needs of remote island communities that usually have increased energy needs during the summer season, and little energy use in the rest of the season. The approved budget for the works is $2.6 billion (USD) and is not conclusive, since it stipulates that more projects will come in place once and if private investors are interested in participating in those, including a new LNG terminal and an underground storage facility.

Fluxys has in interest for the Greek gas market in the long-term nature; it's a main shareholder of the Trans-Adriatic Pipeline with 19% of that project's shares. Fresh reports from the Belgian press indicate that it aims to establish DESFA as the main gas hub company in Southeast Europe and that it is currently in the due diligence process before acquiring a stake in the entity. Its main competitor so far is the Italian Snam which has also expressed an interest, but has not formalised its plans.

The interest of Fluxys looks promising for DESFA. Nevertheless, there is a catch. One of Fluxys's main shareholders, the Canadian fund Caisse de dépôt et placement du Québec, is vetoing its entrance into the Greek market. As an alternative, the senior management of Fluxys is seriously considering becoming involved in a joint venture with the FPIM investment fund company and the Publigas one, both Belgium-based firms. They plan to raise capital from available funds from the European bank of reconstruction and development (EBRD).

In the long-run Greek pundits expect Fluxys to raise more capital for joint projects with DESFA but also the other state gas trading company, named DEPA. The waiting time for the privatisation process of DESFA may have been long but the large infrastructure project in the gas sector that will be materialised in the country in the coming years may make it worth the wait for Fluxys.

Ioannis Michaletos

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Egypt and Israel: Tensions over natural gas supplies | Daily News Egypt

Egypt seeks recourse to Swiss appellate courts to avoid paying compensation to Israel

Doaa Farid, 19 December 2015

When asked to describe Egyptian-Israeli economic relations in early 2015, head of the Foreign Trade Administration in the Israeli Economy Ministry Ohad Cohen  assured that they were “stronger than ever.”

2015 is however ending with renewed tensions concerning gas dealings between Cairo and Jerusalem, with the looming appeal of a Swiss court’s decision that the Egyptian General Petroleum Company (EGPC) pay $1.7bn to Israeli companies as compensation for the shortfall in natural gas supplies.

These tensions mark a divergence from the post-1979 period of peaceful relations and economic exchange between the bordering countries, a period following the Egypt-Israel Peace Treaty that allowed Israel to purchase oil from Egypt

However, the more recent history of Egypt-Israel resource exchange has been subject to turmoil. Immediately following the 25 January Revolution in 2011, pipelines transferring natural gas from Egypt to Israel were repeatedly targeted by militants. Egypt’s revolutionary climate and its political vacillations resulted in the cessation of natural gas exports to Israel in 2012, ending a 20-year agreement between the two parties and prompting Israeli firms to turn to international arbitration to seek compensation.

Earlier this month, the International Chamber of Commerce (ICC) ruled in favour of Israeli companies, requesting that Egypt pay $1.7bn. Israel, which now has two natural gas fields, hopes to continue negotiations with Cairo over exporting natural gas.

Ibrahim Zahran, the petroleum expert responsible for filing a formal complaint documenting purported collusion in the Egypt-Israel gas deal and the subsequent halting of natural gas exports to Israel, told Daily News Egypt he is not optimistic about the negotiations.

“The arbitration was wrong and Egypt has to take a legal action to respond,” Zahran said, stressing that Egypt does not have the financial resources to pay the court-ordered compensation.

Alternative means of compensation would prove equally unlikely, according to Zahran. As Egypt already has a wealth of natural gas reserves and expects natural gas production to augment in 2017, the country would not find it economically prudent to import gas from Israel, which despite its own reserves, does not anticipate an increase in production until 2019.

Halting gas export to Israel costs $1.7bn

International ruling forces state-owned EGPC and EGAS to pay $288m

In early December the Egyptian General Petroleum Corporation (EGPC) and the Egyptian Natural Gas Holding Company (EGAS) announced the ICC’s decision in the arbitration ruling mediating the conflict between the Egyptian companies and the East Mediterranean Gas Company (EMG) and Israeli Electric Corporation (IEC). The ruling stipulates that EGPC and EGAS must pay compensatory funds totalling $288m and $1.7bn to the EMG and IEC respectively.

The East Mediterranean Gas Company (EMG) requested $1.5bn, but was granted $288m, while the Israel Electric Corporation (IEC) was granted $1.7bn, almost half of the $3.8bn it requested.

The ICC’s ruling supported EMG’s and IEC’s contention that compensation is necessary for the shortfall in gas supply and its attendant damages on the Israeli energy sector following Egypt’s halt in gas supply.

Egypt, in response, is following-up on the annulment of the ICC ruling before Swiss courts. International legal advisor Shearman & Sterling law firm told EGAS that it has the right to appeal the ruling in line with Swiss law.

Following the announcement of the ruling, the Egyptian government froze negotiations between companies seeking to import gas from Israeli fields and suspended decision on import approvals until the legal position of the arbitration ruling against Egypt and the results of its appeal become clear.

The unilateral action by the Egyptian government has confused Egyptian company Dolphinus Holdings, among whose responsibilities include negotiating the import of Israeli gas, as to how to proceed. The company said they were told it is necessary to freeze negotiations with Israel after the ruling of the international arbitration.

Dolphinus Holdings, which Alaa Arafa is heading, is a consortium owned by Egyptian investors and partners in Israel’s Leviathan field.

Egypt’s decision to halt negations and subsequent trade with Israel could be a strategic decision, as Egypt is an important export destination for Israel. Following the Egyptian government’s decision, Israeli Prime Minister Benjamin Netanyahu sent a special envoy to Cairo for talks concerning the Swiss court’s decision.

Plot twist: Egypt considers importing gas from Israel

Egypt was said to receive gas imported from Israel at a price no greater than $8 per million BTU

Once dependent on natural gas imports, Israel is establishing itself as an exporter after the exploration of Tamar and Leviathan fields in 2009. Israel’s burgeoning resource economy coupled with Egypt’s energy shortage after the revolution in 2011 has prompted some companies to consider importing gas from Israel through the already-built pipelines between both countries.

Talks over exporting gas from Israeli fields to Egypt started in May 2014 when partners in Israel’s Tamar natural gas field – discovered in the eastern Mediterranean in 2009 and holding an estimated 10 tcf of gas – announced a signed letter of intent with Spanish Union Fenosa Gas (UFG) to export up to 2.5tn cubic feet (tcf) of gas over 15 years to liquefied natural gas (LNG) plants in Egypt.

The deal includes several parties, notably Texas-based Noble Energy, which has a 36% stake in the Tamar field.

As UFG has an 80% stake in an LNG facility in Damietta in Egypt and acts as a third-party mediator between Israel and Egypt alleviating historical concerns over relations between the two countries, the EGPC has approved factories in the city to import gas from Israel and obtain a share of the imported gas to meet the needs of the local market, the EGPC said in August 2014.

Egypt was said to receive gas imported from Israel at a price no greater than $8 per million BTUs, compared to an average price of $16 per million BTUs from other countries.

However, despite the apparent savings, there are several externalities not factored into the quoted $8 per million BTUs. Ancillary costs for importing the gas include: regasification and transportation expenditures centred on the regasification boats that convert the liquefied natural gas back into its gaseous form. The EGPC estimates the cost adjusted for externalities per million BTUs to reach $18.

In October 2014, a non-binding letter of intent was signed between the Tamar Partners and Dolphinus Holdings, which confirms the intention of the involved parties to carry out negotiations facilitating the transfer and sale of natural gas from the Tamar gas field to Egypt.

The gas supply will be 250,000 MMBtu (One million British Thermal Unit) over a period of seven years, of quantities of surplus gas from the Tamar field.

Gas quantities will delivered to Egypt through the Egyptian-Israeli East Mediterranean Gas (EMG) pipelines, constructed a decade ago to transfer Egyptian gas to Israel. Mubarak-era business tycoon Hussein Salem, currently in Spain, owns shares in EMG and is a defendant in a number of cases regarding profiteering and seizing public funds.

Negotiations have continued in 2015. In March, officials from the Ministry of Petroleum were reported to have met representatives from international oil companies, British Gas (BG) and Union Fenosa, in London to discuss Israeli gas supply to Egyptian power plants.

In November, Egyptian head of Dolphinus Holding, Alaa Arafa, signed a letter of intent with Israeli Leviathan Partners (Delek Group and Noble Energy) to supply Arafa’s company with gas from Israel.

Dolphinus is expected to receive 4 BCM (billion cubic meters) of gas per year over 10-15 years in the final agreement.

Commenting on the preliminary agreement, Egypt’s Ministry of Petroleum issued a statement indicating that the Egyptian petroleum sector is not involved. It highlighted that it was already announced that any agreement will not be reached without the approval of Egyptian authorities and the projects to be implemented must be aligned with the national interests of Egypt and contribute value to the economy.

The statement noted that the petroleum sector in Egypt is not opposed to private companies’ needs to import gas using the state’s facilitations and infrastructure, and in return the state would receive a tariff that is to be agreed upon.

Hidden competition between Cairo and Jerusalem on who is next major gas exporter

Italian company Eni announced the discovery of a giant natural gas deposit in the deep waters of Egypt

The recent discovery of offshore gas reserves has shifted Israel’s regional position in the resource market. While Israel was once dependent on imports to cover its needs of natural gas; the discovering of the Leviathan offshore deposit in 2009 enabled the country to establish itself as an exporter after covering domestic needs.

Production in the Leviathan field is scheduled to start in 2019-2020, delaying Israel’s emergence onto the regional energy sector temporarily.

Egypt has similarly seen a potential significant shift in its resource future, after a period following the 2011 revolution in which it suffered energy shortages. In August 2015, the Italian company Eni announced the discovery of the Zohr natural gas deposit in the deep waters off Egypt’s north coast.

While estimates are yet to be conclusive, early reports suggest that the deposit could hold a reserve of 30tr cubic feet of gas on an area of approximately 100 sqkm. The Zohr reserve is the largest gas discovery ever made in Egypt and in the Mediterranean Sea, according to Eni.

EGPC has reached an agreement with the Italian petroleum company Eni to begin production from the Zohr gas field by 2017, with the goal of a daily production capacity that will reach 1bn cubic feet (bcf).

Between the newfound resource prosperity of both countries, several extenuating factors will determine the future of the region’s resource market.

Notably, Egypt has a highly developed resource infrastructure, with the largest terminal for gas in the Mediterranean that can receive up to 9bn cubic feet of natural gas per day, in addition to a liquefaction plant that can export 1,880m cubic feet per day, securing for the country more foreign currency reserves after export.

However, Israel produces gas from eight fields, in addition to the newly discovered Ishai field in the Israeli and Cypriot territorial waters.

Outside of the geopolitical posturing, the two sides have seen an enforced entwinement of their interests, tainted as they are by recent corruption scandals.

On 1 July, 2005, then Egyptian petroleum minister Sameh Fahmy and Israeli Minister of National Infrastructure Benjamin Ben-Eliezer signed an agreement whose framework aims to supply 1.7bn cubic meters of natural gas annually to the Israel Electric Corporation (IEC) starting October 2006.

A confidential document prepared by the US embassy in Cairo, revealed by Wikileaks in September 2011, said the US perceived the gas deal as “the most lucrative ever”.

The gas deal at that time had faced strong opposition from activists and civil society organisations, but with a few years, financial corruption was proven in the case. In June 2012, Fahmy was sentenced to a prison term of 15 years and businessman Hussein Salem was also found guilty and sentenced to 15 years in absentia for profiting from the gas deal.

The defendants were found guilty of harming the interests of the country and squandering public funds by selling and exporting natural gas to Israel at below market rates.

Egypt lost an estimated $715m in revenue due to the collusion between Fahmy and Hussein with Israel, according to the general prosecution. All of the defendants in the case were collectively fined approximately $2.5bn.

Despite this recent tension, Israel has shown signs that it wants to improve the relations. Last week, Israel revealed intentions to give Cairo 2% of earnings from the Qualified Industrial Zone (QIZ) in Egypt, following the release of Israeli Ouda Tarabin from Egyptian prison.

The QIZ concept was established in 2004 under a trilateral agreement between the US, Egypt, and Israel. The agreement grants Egyptian products from pre-approved zones tariff-free entry to the US provided they contain a minimum of 11.7% as inputs from Israel.

Egypt has tried several times to reduce the Israeli component in products exported under the QIZ agreement from 11.7% to 8%, a concession that was made to Jordan. Egypt’s exports to the US under the QIZ agreement amounted to $920m in GDP in 2014, about 50% of the total Egyptian exports to the US, according to the embassy’s official data.

As Egypt does not have the resources to pay the gas deal compensation, it is expected that Egypt can carry on negotiations over importing Israeli gas as indirect way to avoid the fine. However, negotiations have seemingly reached an impasse as Israel insists on receiving the compensation.

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Weekly Overview On Eastern Mediterranean Natural Gas Matters | Natural Gas Europe

December 18th, 2015

Israel approves the natural gas framework

This week’s major development in the Eastern Mediterranean is Prime Minister Netanyahu’s signing of the natural gas framework deal that will allow the partners in Israel’s Leviathan to move ahead with the development of the giant field and reach export stage. Netanyahu’s approval of the plan to develop Israel’s offshore natural gas field via the application of clause 52 of the Antitrust Law strips the country’s Antitrust Authority from its overseeing power over the industry to avoid any hindrance to the effective development of the fields. The Prime Minister's application of clause 52 of the Antitrust Law, granting the economy minister the exclusive power to override decisions by the Antitrust Authority chief on issues with sensitive strategic or diplomatic implications, was considered artificial by the chairman of the Knesset Economics Committee and motivated by economic reasons rather than national interest.

The Knesset Economics Committee voted against the framework

The Committee’s non binding recommendation issued on Wednesday after 11 sessions was against Netanyahu’s plan (7 votes against 6), that it considered the plan to be motivated by economic reasons, rather than diplomatic, as advanced by the Prime Minister. The committee announced it was “not convinced at this time, as well as in the foreseeable future, [that] there are reasons of foreign policy and security that justify such an extreme measure as an administrative exemption from the law’s commands in the hands of the economy minister, while the supervision of monopolies and restrictive trade practices should be carefully controlled, in the manner determined by the Antitrust Law."

Noble Energy applauded Netanyahu's decision

Noble’s Senior Vice President, Keith Elliott, welcomed the news expressing his satisfaction, stressing the importance of the development of the fields to the security and economic prosperity of Israel and confirming that the approval of the framework enables Noble to move ahead with the development of Israel’s offshore fields.

Appeal against the decision before the High Court of Justice to be expected

Netanyahu’s decision to override the committee’s recommendation by the signing of the deal at a ceremony on Thursday held at the Neot Hovav Industrial Park in the Negev, is not considered final as it may be appealed against by the opposition party the Zionist Union before the High Court of Justice. Former Antitrust Commissioner David Gilo resigned in August to express his opposition to the deal, as he was concerned that price would be distorted in Israel’s natural gas market as a result of permitting Noble and the Delek Group to hold on to their shares in Israel’s largest offshore fields.

Israel's ambition to export to Egypt still at risk

Israel’s delays in the development of its offshore fields have been caused by a dispute between the partners in the Leviathan and Tamar fields and the country’s competition regulator accusing the owners of the fields of constituting a cartel that would distort competition in the domestic natural gas market. Approving the natural gas framework would enable Israel to export gas to regional markets, namely Egypt. The two countries have been engaged in talks over the possibility of exporting gas from Israel’s Tamar and Leviathan to Egypt’s domestic market.

Despite its previous appetite to import gas from its neighbour, Egypt has ordered the immediate halting of the gas negotiations after a ruling by international arbitrators earlier this month ordering Egypt to compensate Israel with $1.76 billion to repair the damage caused by the disruptions in the flow of natural gas in the aftermath of the Arab Spring in 2011. At the time, Egypt was supplying Israel with Egyptian gas, but attacks to the pipeline caused major disruptions following the toppling of President Husni Mubarak.

Cyprus still eyeing the Egyptian market

Israel’s struggles to approve the natural gas framework are not the only hurdles it will face before it can export gas to Egypt and the region, and potentially use Egypt’s underused export terminals to reach distant lucrative markets. Its newly strained relationship with Egypt will also have to be restored by diplomatic means. Despite the discovery by ENI of a huge field, Zohr, in Egyptian waters, Egypt was still looking to import gas from Israel in the short term to solve its energy crisis. Egypt’s refusal to compensate Israel as ruled by the arbitrators of the International Chamber of Commerce, and its discovery of the Zohr field estimated at up to 30 trillion cubic feet make a gas deal with Israel fragile. 

Egypt maintains a good relationship with Cyprus and has announced it is still interested in importing gas from Cyprus’ Aphrodite field. Cyprus has been involved in a series of meetings with its neighbours Egypt, Israel and Greece to discuss ways of optimising the natural gas finds in its waters. Cyprus has also discussed the possibility of joint export infrastructures with Israel. Exporting gas to Egypt via a common undersea pipeline between Israel and Cyprus will now depend on the future of the Israeli-Egyptian relationship.

Lebanon said to be closer to opening its first licensing round

Also in the Eastern Mediterranean, Lebanon is now closer to opening its first licensing round. The country’s first offshore bidding round has been repeatedly postponed despite substantial interest expressed from international oil and gas majors in the country’s pre-qualification round.

Lebanon’s political vacuum, the country operating without a President since May last year, and the spillover of Syria’s civil unrest next door have prevented the Government from issuing two pieces of legislations that are essential to launching explorations offshore. The two missing decrees will delineate offshore blocks and lay out a model production-sharing agreement. Lebanon’s Minister of Energy announced this week that the different political parties are closer to reaching an agreement regarding the country’s energy industry. The fear remains whether international oil and gas companies would still be interested in tapping Lebanon’s waters after losing confidence in the country’s ability to stick to deadlines and lead the process to fruition.

Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat 

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REPORT A Gas-Powered Rapprochement Between Turkey and Israel | Foreign Policy

After five years of discord, Ankara and Jerusalem are ready to mend ties, driven in no small part by Turkey’s desire to get access to Israeli natural gas.

BY KEITH JOHNSON, DECEMBER 18, 2015

Turkey’s quest for new sources of energy to escape Russia’s clutches may have helped power the latest push for reconciliation with Israel, five years after the two countries acrimoniously split.

But a full restoration of ties between Ankara and Jerusalem, which has proven elusive before, requires further concessions on thorny issues like the future of Gaza, and concrete energy ties between the two nations are likely years away at best.

Israel and Turkey said on Thursday that secret diplomatic talks in Switzerland had paved the way for the long-awaited reconciliation. Both sides mapped out steps that will need to be taken to restore ties that were broken when Israeli commandos stormed a Turkish vessel bringing relief supplies to Gaza in 2010.

According to Israeli media reports, Israel will pay Turkey compensation for that raid. Turkey, in turn, has agreed to crack down on Hamas terrorists operating from Istanbul. The two sides then need to reach an agreement about Israel’s blockade of Gaza, which has torpedoed past efforts at rapprochement. Once ties are restored, the two countries said they planned to “explore” cooperation on natural gas, with Israel exporting some of its offshore bounty to Turkey.

“I think the reconciliation was a long time in the making, and security cooperation between the two sides had already deepened over the last year,” said Brenda Shaffer, a Georgetown University expert on eastern Mediterranean nations. She said the detente is “about politics and security, not gas” — although Turkey is also happy to quench its energy needs from sources other than Russia, given Ankara’s ratcheting tensions with Moscow over the last month.

“Ankara has an interest now in showing the Russians it has other options to get natural gas,” Shaffer said.

Indeed, while both sides had come close to making amends before, especially in 2013 and 2014, leaders in both countries recently had signaled a possible thaw. Israeli Prime Minister Benjamin Netanyahu told Israeli lawmakers last week his government had been in talks with Turkish officials regarding exports of natural gas. Earlier this week, Turkish President Recep Tayyip Erdogan stressed that a restoration of ties between the two embittered countries would be good for “the entire region.”

The deteriorating situation in Syria, and especially Russia’s sudden leap into the ongoing civil war there, appears to have landed like a cannonball in the middle of the diplomatic dance between Turkey and Israel. Both sides are concerned about security threats boiling out of a disintegrating Syria, especially the Islamic State. And with Russia throwing its military might behind Syrian strongman Bashar al-Assad and behind groups hostile to Turkey and Israel, the two countries saw grounds for common cause.

“Both countries see Russia’s presence and Russian-backed groups in Syria as a threat,” said Soner Cagaptay, director of the Turkish Research Program at The Washington Institute for Near East Policy.

The final catalyst seems to be Turkey’s newfound need to find an energy supplier other than Russia, from whom it imports more than half of its natural gas. In October, after the Russian military jumped into Syria, Turkey warned it could harm ties between Ankara and Moscow. After Turkey shot down a Russian jet that invaded its airspace in late November, relations took a nosedive. Russia slapped economic sanctions on Turkey, cancelled a high-profile natural-gas pipeline, and threatened further reprisals.

Turkey, fearing that Russia could use its control over energy exports as a geopolitical bludgeon, quickly started scouring the region for other sources of gas. Israel made a huge discovery of gas off its coast years ago, but has been struggling to figure out just who to sell it to.

“I think the tension between Russia and Turkey is what makes Israeli gas even more desirable from the Turkish side,” Cagaptay said.“I think the tension between Russia and Turkey is what makes Israeli gas even more desirable from the Turkish side,” Cagaptay said. “If Russia decides to put Erdogan in a difficult situation, they could limit the sale of Russian gas.”

That doesn’t mean that Israeli gas will be fueling Turkish power plants anytime soon, even if the two sides manage to normalize relations. For starters, the development of Israel’s offshore gas fields has been held up for the past year due to domestic issues. Even preliminary deals that Israel appeared to have reached with friendly neighbors have gone south in recent months. Plans to export Israeli gas to Egypt and Jordan — the two Arab states with which Israel has a peace accord — have both foundered on domestic political opposition there.

What’s more, planning, financing, and building a natural-gas pipeline can take decades, even when there are few political or diplomatic complications, let alone the daunting technical challenges of laying pipe on the deep Mediterranean seabed. For example, Azerbaijan made a huge gas find in 1999, but took 14 years to secure a final decision on an export pipeline through Turkey, and gas won’t start flowing until 2018, Shaffer noted.

“While this reconciliation will give impetus to a lot of ‘energy diplomacy’ between Turkey and Israel, and that is a good thing to help smooth relations between Ankara and Jerusalem, it will not bring in the short term a concrete deal on natural gas supply,” she said.

There are also domestic political complications, especially in Israel, where both the left and right jeered the rapprochement. Opposition leader Isaac Herzog said reconciliation could have happened earlier, but Netanyahu dragged his feet. Conservative Avigdor Liberman, a former foreign minister under Netanyahu, slammed the accord as a sellout to a “radical Islamist regime.”

All those hurdles to actual energy trade — diplomatic, domestic, commercial, and technical — are real. But Russia’s unbridled fury at Turkey — Moscow has decried Turkey’s “stab in the back,” has accused Erdogan of being in bed with the Islamic State, and has taken potshots at a Turkish fishing boat — could nevertheless end up steamrolling those challenges and paving the way to turn Israeli gas exports from dream to reality.

In Israel, Netanyahu last week pointed to the diplomatic dividends of energy trade to justify overriding Israeli technocrats and pushing for the controversial development of Israeli gas fields. He said that exporting energy to neighbors was crucial to safeguard Israel’s future security. Turkey, for its part, sees itself acutely vulnerable to any sudden interruption of Russian gas supplies.

“Earlier, diversifying energy supplies was a long-term need that Turkey had. With the crisis with Russia, this has become a pressing need,” Cagaptay said.

“A pipeline would be a huge deal, meaning the next time the Turkish-Israeli relationship faces a political shock like in 2010, that pipeline would keep them together, given its political, economic, and commercial ramifications,” he said.

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The American Vacuum the Russians Rushed to Fill in the Eastern Mediterranean | Natural Gas Europe

December 18th, 2015

The prospect of Israel importing natural gas to Turkey is unlikely, according to natural gas and geopolitical consultant George D. Papadopoulos. He offered the opinion at a conference entitled "2015 Business and Energy," which recently took place in Israel, during which he described the new geopolitical landscape in the Eastern Mediterranean region.

His opinion could likely rub investors the wrong way: Turkey is reportedly the destination to which Noble Energy and, in particular, Delek Group, believe its gas should go, as both regard the Turkish market as the most lucrative one.

Jordan's NEPCO says LNG import terminal back at full capacity | Egypt Independent

Jordan's National Electric Power Company (NEPCO) said its floating liquefied natural import terminal was back working at full capacity after adverse weather disrupted operations earlier this month.

NEPCO declared force majeure on the terminal on Dec. 5 due to strong winds requiring the floating, storage and regasification unit (FSRU) to be moved away from the jetty, a spokeswoman for the company said.

At the time, the firm also informed state-run Egyptian Natural Gas Holding Co (EGAS) that it could not meet its agreement to deliver volumes transported from its FSRU through the pipeline to Egypt.

Gas supplies to both Jordan and Egypt were disrupted for a few days before the plant initially resumed operation at half capacity, and then finally full capacity, the spokesperson said. 


Source / Reuters

Press Releases on Dec 17 2015 | Delek Group

Approval of Outline Plan for Organization of the Natural Gas Market
Tel Aviv, December 17, 2015. Delek Group (TASE: DLEKG, US ADR: DGRLY) (“the Company”)  announces pursuant to what was stated in section 1.7.25(3) of the  Company's Annual Report to December 31, 2014 that was published on March 30,  2015 (ref. no. 2015-01-067483), and the Company's Immediate Report dated August  17, 2015 (ref. no. 2015-01-097854) concerning the Government's approval of the  outline plan to increase the amount of natural gas produced from the Tamar  natural gas field and the rapid development of the Leviathan, Karish and Tanin  natural gas fields and other gas fields ("the Gas Outline Plan" or "the  Outline"), subject to provision of a waiver under section 52 of the Anti  Trust Law, 1988 ("the Anti Trust Law"), as stipulated in the Outline,  that on December 17, 2015 the Gas Outline Plan was validated, after the Prime  Minister in his capacity as Minister for the Economy exercised his authority  under section 52 of the Anti Trust Law.

Below (respectively)  are links to the website of the Prime Minister's Office concerning the Prime  Minister's announcement and the wording of the Outline: 
http://www.pmo.gov.il/MediaCenter/Speeches/Pages/speechGas171215.aspx 
http://www.pmo.gov.il/Secretary/sederyom/gov34/Documents/n105.pdf

The Partnerships,  Delek Drilling Limited Partnership and Avner Oil Exploration Limited  Partnership have added in respect of approval of the Outline that since the  Outline has become effective as stated above, the Partnerships will act to  implement it in accordance with its terms and the terms of the leases, and in particular will act, together with their partners in the Leviathan and Tamar  leases, to continue making investments and carrying out the necessary actions for  the rapid development of the Leviathan field and the expansion of the Tamar  field.

This is a convenience translation of the original HEBREW immediate  report issued to the Tel Aviv Stock Exchange by the Company on December 17, 2015.
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Petition to High Court
Tel Aviv, December 17, 2015. Delek Group (TASE: DLEKG, US ADR: DGRLY) (“the Company”) announces that attached is an Immediate Report just  submitted by each of Delek Drilling Limited Partnership and Avner Oil Exploration Limited Partnership (together "the Partnerships")  concerning a petition to the High Court against various bodies including the  Partnerships, which principally contains claims concerning the Government decision to approve the Gas Outline Plan, and concerning the National Master Plan for planned natural gas installations, and a request to be granted an  interim injunction that orders, inter alia, the Prime Minister and Minister of  the Economy not to approve the Gas Outline Plan in accordance with section 52  of the Anti Trust Law, 1988, as detailed in the attached report.

We  hereby announce that on December 16, 2015 the Partnerships received a copy of  the petition to the High Court, including the request for an order nisi and the  grant of an interim injunction, filed by the Israeli Forum for the Protection  of the Coastline, against Benjamin Netanyahu, Prime Minister and Minister for  the Economy, the Government of Israel, the Ministry of National  Infrastructures, the Ministry for the Protection of the Environment, the Ministry  of Health, the National Council for Planning and Construction, and against Delek Drilling Limited Partnership, Avner Oil Exploration Limited Partnership  and Noble Energy Mediterranean Ltd. It included principally claims concerning  Government Decision No. 476 dated August 16, 2015 concerning approval of the  Gas Outline Plan, and to the National Master Plan 37/h and 37/2 concerning  planned natural gas installations, and the request for the grant of an interim  injunction ordering, inter alia, the Prime Minister and Minister of the Economy  not to approve the Gas Outline Plan in accordance with section 52 of the Anti  Trust Law, 1988.

The  Partnerships intend to study this petition to the High Court with the  assistance of their legal counsel, to assess its significance and accordingly  to formulate their further steps in the matter.

This is a  convenience translation of the original HEBREW immediate report issued to the  Tel Aviv Stock Exchange by the Company on December 17,  2015.
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Noble Energy Confirms Implementation of Israel's Natural Gas Framework | Noble Energy

December 17, 2015

Houston, Dec. 17, 2015 (GLOBE NEWSWIRE) -- Earlier today, Noble Energy, Inc. ("Noble Energy" or "The Company") (NYSE: NBL) was notified that the Government of Israel acted to implement the Natural Gas Framework through execution of Section 52 of the Restrictive Trade Practices Act.  Execution of Section 52 resolves and provides exemption from claims of the Anti-trust Authority with respect to the Leviathan Joint Venture partners' acquisition of petroleum rights in the underlying permits.

The Natural Gas Framework establishes the regulatory certainty and stability necessary to proceed with development of both the Tamar expansion and Leviathan, while providing transparency for future domestic pricing and natural gas competition in Israel. The Natural Gas Framework also enables marketing of Leviathan gas to Israeli customers for the first time.  The development of Leviathan will substantially expand Noble Energy's capacity to deliver gas to Israel and the region, as well as provide a second source of domestic natural gas supply and redundancy of infrastructure for the people of Israel. 

Noble Energy has continued to take steps to move forward with development of Leviathan and the Tamar expansion by advancing technical work and negotiating gas sales agreements.  In addition, the Company is updating and finalizing capital investment requirements. These activities will enable the Company to conclude external financing agreements required to reach final investment decisions (FIDs). FID for each project is currently estimated to be taken before the end of 2016.

Keith Elliott, Senior Vice President, Eastern Mediterranean, commented, "We are pleased that the Government of Israel, under the leadership of the Prime Minister and Minister of Energy, has recognized the importance of natural gas development to the security and economy of Israel and the region. This enables us to move forward with development planning. The high quality of the Tamar and Leviathan reservoirs, combined with Noble Energy's strong track record of major project execution, gives us confidence that these world-class assets are well positioned to meet the growing and undersupplied natural gas demand of Israeli and regional customers."

Noble Energy operates Tamar and Leviathan with 36 percent and nearly 40 percent working interests, respectively.

Noble Energy (NYSE: NBL) is a global independent oil and natural gas exploration and production company with total proved reserves of 1.7 billion barrels of oil equivalent at year-end 2014 (pro forma for the Rosetta acquisition). The company's diverse resource base includes positions in four premier unconventional U.S. onshore plays - the DJ Basin, Eagle Ford Shale, Delaware Basin, and Marcellus Shale - and offshore in the U.S. Gulf of Mexico, Eastern Mediterranean and West Africa. Driven by its purpose, Energizing the World, Bettering People's Lives®, the company is committed to safely and responsibly providing energy to the world while positively impacting the lives of our stakeholders. For more information, visitwww.nobleenergyinc.com.

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Netanyahu set to sign gas framework today | Globes

The Prime Minister will approve the roadmap despite the Economic Affairs Committee's objection to using section 52

17/12/2015, Hedy Cohen

Prime Minister Benjamin Netanyahu will approve the gas framework on Thursday by activating section 52, despite the Economics Affairs Committee advising the Israeli leader not to activate the legal bypass.

After the framework is signed, its merits will be deliberated by the High Court of Justice, where the judges will decide over the coming months whether to approve or reject the roadmap.

The Economics Affairs Committee, chaired by MK Eitan Cabel (Zionist Union), said last Monday the was no justification to bypass the authority of the antitrust regulator for the activation of section 52 due to security concerns.

The committee’s vote, essentially recommending Prime Minister and Economy Minster Netanyahu not to approve the gas framework in its current iteration, was won by a margin of one.

Published by Globes [online], Israel business news - www.globes-online.com - on December 17, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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Cheniere Energy eyes stake in Greek LNG project | Reuters

Wed Dec 16, 2015, ATHENS 

Cheniere Energy, a U.S-based liquefied natural gas (LNG) exporter, is interested in a minority stake in a new LNG terminal that will supply gas to southeastern Europe through Greece, a senior company official said on Wednesday.

Greece currently has one LNG terminal on an islet off Athens. Greek energy firm Copelouzos is planning to build an offshore LNG terminal near the northern city of Alexandroupolis.

That facility, with an estimated annual capacity of 6.1 billion cubic metres (bcm), will seek to supply gas to southeastern Europe via a natural gas pipeline that will cross through Greece, the Interconnector Greece-Bulgaria (IGB).

IGB pipeline deal, signed between the two countries last week, aims to tap gas from Azerbaijan and help diversify supply for a region mainly relying on Russia gas.

Cheniere's head of marketing, Jean Abiteboul, told reporters in Athens on Wednesday that the firm was interested in the terminal project.

"Not only your country but the region is highly dependent on one supplier, which is a Russian supplier, Gazprom," Abiteboul said.

"We believe that bringing American gas in your country will help to diversify the gas supply and, eventually, which is the most important, to reduce the cost of energy for the region."

Abiteboul, who met Greek Energy Minister Panos Skourletis on Tuesday, said Cheniere and Copelouzos were in talks about the project though discussions were still at an early stage.

A senior official at Copelouzos' Gastrade unit, which will build the terminal, said the Alexandroupolis facility could be operational in the first half of 2018 as long as the final investment deal was signed next year.

The facility is expected to cost between 350 and 380 million euros ($415 million) and will be financed by EU funds, equity and debt.

Abiteboul said Cheniere was also in talks to supply gas to Greece's natural gas company DEPA.

"They (DEPA) are interested in buying gas from us," he said. "DEPA has a long-term contract with Gazprom but there is room for additional gas."

($1 = 0.9148 euros) (Reporting by Angeliki Koutantou; Editing by Mark Potter)

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Greece's Great Gas Gig | Natural Gas Europe

December 16th, 2015

Greece's gas market is opening up, according to Dr. Kostas Andriosopoulos, Senior Advisor to the new CEO and the Chairman of DEPA Public Gas Corporation SA.

Dr. Andriosopoulos, who is also Director of the Research Center for Energy Management at ESCP Europe Business School, explains that the opening of the Greek market (along with DEPA's plans) could translate into big opportunities, both for Greece and for investors. He remarks, “In two-and-a-half years' time the gas market will be completely open, both in the retail and wholesale. That brings new entrants into the market, new market opportunities in general, and more pressure on the company to protect its market share-its business in general.”

Greece's gas market reform having recently been passed in parliament, he contends it is now in the best interests of Greece to go forward with a number of prospects envisioned and voted on by DEPA's Board of Directors. As part of DEPA's 5-year business plan, the company would like to pursue projects like a floating storage and regasification unit (FSRU) project in northern Greece. Dr. Andriosopoulos adds: “On top of that, we are looking at trying to gasify more of the country further, which means we want to enlarge and enhance the gas consumption in the country.”

Update With Regards to Hannah/351 License – December 15, 2015 | Delek Group

Tel Aviv, Tuesday, December 15, 2015. Following the earlier reports made by the partners in the Hannah license to the Petroleum Commissioner in the Ministry of National Infrastructures, Energy and Water Resources ("the Commissioner"), the following is noted. Based on the findings of the "Dolphin" well, a Netherland, Sewell & Associates report evaluating the resources, economic analysis and assembly of relevant data, the natural gas reservoir "Dolphin", located in the Hannah license area, is pronounced a discovery as defined in the Petroleum Law – 1952, which justifies its development. The Hannah license partners, including the Delek Group gas subsidiaries, submitted a request to the Commissioner for declaring Dolphin a discovery as well as a request for the extensions of its validity, in accordance with Article 18(b)(2) of the Petroleum Law and Article 15 of the Petroleum Regulations – 1953.

The offshore gas bonanza Israel was counting on might never materialize | Quartz

The offshore gas bonanza Israel was counting on might never materialize

Tel Aviv, Israel

WRITTEN BY Josh Mitnick, December 14, 2015

In 2010, Israel discovered a large natural gas off-shore reserve. Dubbed Leviathan, it was supposed to be a game-changer for the country. Five years later, it’s no longer looking like a sure bet.

In theory, cheap energy from the gas field could boost the economy and provide enough power generation for decades. Tens of billions of dollars in royalties and tax revenue could pad public coffers.

Most critically, according to prime minister Binyamin Netanyahu, Leviathan has enough gas to yield Israel’s first-ever energy export deals—offsetting the state’s increasing isolation over its reluctance to hold comprehensive peace talks with the Palestinians. “Our ability to export gas enhances the strength of the state of Israel… It makes Israel much more resilient to international pressures,” he recently told the Knesset’s economics committee.

To that end, Netanyahu and his top aides have traced out a regional energy alliance in which Israeli gas would become a linchpin knitting together an arc of so-called moderates spanning from Amman to Athens. This vision involves Israel exporting gas to Egypt and then on to Europe, as well as a pipeline to transport Israeli and Cypriot gas to Greece. Providing gas to Europe might defuse efforts to boycott goods from West Bank settlements, according to Netanyahu’s advisors. Meanwhile, looking east, Israeli exports to Jordan would bolster the Hashemite Kingdom’s energy shortfall, and block efforts by Iran to become Jordan’s supplier.

“A new Middle East of energy,” joked Alon Liel, a former diplomat, who likened the government’s plan to the half-baked Israeli visions for regional economic interdependence that were floated in the 1990s, at the height of the Israeli-Palestinian negotiations.

But the fate of Leviathan now looks hazy. Though the gas field’s developers, Houston’s Noble Energy and Israel’s Delek Group, signed a tentative deal last year to supply $30 billion worth of gas to liquefaction facilities in Egypt, the prospects of that happening seemed to recede last week. On Dec. 6, hours after an international arbitration court awarded Israel’s electric utility $1.7 billion for a cut-off in Egyptian gas exports that followed the fall of president Hosni Mubarak in 2011, Cairo announced a freeze of negotiations over sending Israeli gas to Egypt. The discovery of a massive gas reserve off the coast of Egypt this past summer also makes Israeli gas less of a long-term necessity.

Turkey could have been a customer for Israeli gas—some argue it’s still the best bet—but after five years of political estrangement between the former close allies, it’s looking like a long shot.

Leviathan is estimated to have 470 billion cubic meters (16.6 trillion cubic feet) of gas. Together with Tamar, a natural gas field discovered in 2009 which has 300 BCM, the two reserves are thought to be enough to supply Israel for nearly 40 years. Tamar was rushed in to production to ease a shortage after the supply cut from Egypt in 2011.

But without a big export deal, officials, executives and analysts say there’s a chance Leviathan may remain untapped. “You need to show where the money is going to come from—a contract for 15 to 20 years. Nothing short of that will produce the credit to finance” development of Leviathan, said a former Israeli gas executive who asked to remain anonymous. “Absent an anchor client… we are not going to have exports. For the moment we are stuck.”

In addition, Netanyahu’s government is facing a political headache over the regulatory framework for the gas deal.

The 36-page arrangement, approved by the Knesset in September, formalizes a pricing mechanism, deadlines for developing Leviathan, and pre-requisites for exporting Israeli gas. But it hands Delek and Noble Energy a monopoly that would be exempt to government price oversight. Street protests have accused Netanyahu of signing away control over a public resource to the corporations. Israel’s Electricity Authority warned that the arrangement could cost the economy nearly $2 billion in overpriced electricity bills over 15 years. The antitrust commissioner (who later resigned) ruled that the framework would establish a powerful monopoly that could gorge consumers. Netanyahu responded by invoking an obscure legal clause that allows an override of antitrust rulings on national-security grounds. Opponents are preparing to challenge him (link in Hebrew) in the country’s supreme court.

The companies involved are frustrated too. Griping about government foot-dragging and shifting regulatory requirements, Noble and Delek have warned they’ll abandon Leviathan if the government tries to reopen the terms of the gas deal. Regulatory delays on Leviathan have also put a damper on investment in exploration in Israel’s other offshore gas concessions.

If the gas from Leviathan stays in the ground, the government could lose up to $2.4 billion in tax revenue by 2022, according to an estimate by the finance ministry. There’s also the problem of energy security: Israel would have to find a source for imports instead of relying solely on the Tamar field, which currently supplies half of Israel’s energy.

Though Netanyahu and the gas companies blame the delays on calls for more regulation, Amir Mor, who runs the Israeli consultancy EcoEnergy, says Israel lost valuable time because the government itself didn’t make developing gas regulations a priority.

“I hope Israel didn’t lose the window of opportunity to export gas to Egypt,” Mor said. “We’ll be smarter in the next few months.”

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