Israel Corp unit Oil Refineries is temporarily buying gas from the Israeli field, after the flow of Egyptian gas was halted.
4 May 11 11:01, Adi Ben-Israel
Israel Corporation (TASE: ILCO) subsidiary Oil Refineries Ltd. (TASE:ORL) reached an agreement with Delek Group Ltd. (TASE: DLEKG) and Noble Energy Inc. (NYSE: NBL) to buy natural gas from Yam Tethys, because of the cessation of gas deliveries from Oil Refineries' supplier Egypt's East Mediterranean Gas Company (EMG). Yesterday, Oil Refineries completed the hook up of its facilities to the national natural gas pipeline. However, the April 27 attack on a pipeline in Sinai stopped gas deliveries to Israel and other countries. EMG shareholder Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) believes that EMG will resume deliveries by mid-May. In view of the uncertainty about the resumption of deliveries, Oil Refineries has, at least temporarily, switched to an Israeli supplier. Oil Refineries will initially buy gas from Yam Tethys for two days to test the company's natural gas system and the gas flow, paying spot prices. It added, "There is no certainty about additional spot transactions or their terms," opening the door to further purchases.
Oil Refineries switch to Israeli gas from Egyptian gas has broader importance. Israel Corp. is in talks with Tamar gas field partners - Delek, Noble Energy, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Alon Natural Gas Exploration Ltd. (TASE: ALGS) - on a $4 billion long-term natural gas supply contract. In December, Israel Corp and its subsidiaries signed a $4 billion gas supply contract with EMG, two months before the fall of the Mubarak government in Egypt. Attacks on gas facilities in Sinai has increased uncertainties about the reliability of Egyptian gas deliveries, which enables Delek, Noble Energy, and their partners to ask for higher prices for their gas.
Delek Group's share price rose 1.6% in morning trading to NIS 865.70, and the share prices of its units, Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) (the direct owners in Yam Tethys and Tamar) rose 1.6% to NIS 2.36 and 0.4% to NIS 13.30, respectfully. Isramco's share price rose 2.5% to NIS 0.436.
Oil Refineries' share price fell 0.3% to NIS 2.50, but Israel Corp.'s share price rose 0.2% to NIS 4,084. Ampal's share price fell 1.3% to NIS 4.25.
Published by Globes [online], Israel business news - www.globes-online.com - on May 4, 2011
