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| Yossi Abu, Delek Group |
Delek Group, the main Israeli partner in the Leviathan partnership, is close to securing $2bn in funding for its part in the development of Leviathan gas field. The CEO of Delek Drilling Yossi Abu negotiated deals with banks while on a visit to the US last week, according to Israeli business daily Calcalist.
Delek would invest $500mn of its own money in the project. The other main partners are Noble Energy (36.99%) and the Israeli company Ratio (15%). Noble Energy has already said it will not put its own money into the project and would seek loans instead. Last year Noble repatriated $858mn of which a significant amount was supposed to be invested in Leviathan development. Noble might try to sell off some of its holdings in the project before development starts.
Last week the Israeli energy ministry approved the development program for the gas field. The development will be implemented in two phases: the first one drilling four wells, building an off shore platform for gas processing and connecting the platform to the Israeli shore in a new entrance in the northern part of the country. That phase is based on 12bn m³/yr output with sales in the domestic market, export to Jordan and export to Egypt through the EMG undersea pipeline for local industry.
The second phase is dependent upon the availability of the Anglo-Dutch major Shell's Idku liquefaction facility in Egypt and a 15-yr sale and purchase agreement.
The new development plan budget for the first phase is estimated at $4bn, down from earlier estimates of $5-$5.5bn.
The leading banks are HSBC and J P Morgan. The loan would be for four or five years as a bridge loan until production starts. By then Delek Group is expected to sell debt in order to refinance the project. The same financing mechanism was used in the development of Tamar gas field. According to the report the loans rate would be at 3%-4% lower than the 4.25%-5% that applied in the case of Tamar.
However, it is not clear what kind of guarantees the banks would demand. Last year the chairman of the Foreign Banks Association in Israel said that banks would demand guarantees either from the government or from international agencies, such as Exim Bank, in order to hedge against changes in the political landscape in a turbulent region.
Ya'acov Zalel
SOURCE
