Leviathan Consortium Sign LoI for Gas Supply to Egyptian Customers

Following the signing of a new letter of intent (LoI), Delek Group announced today (Wednesday) that it intends to supply natural gas to Egypt from the yet to be developed Leviathan gas field. The LoI was signed with Dolphinus Holdings Limited, a group of private Egyptian businesses.

In a note to the Tel Aviv Stock Exchange (TASE), Delek Drilling, a subsidiary of Delek Group, said that the contract is for a quantity of maximum 4 billion cubic metres (bcm) annually for a period of 10-15 years. The gas price will be Brent-linked with a price floor.

The gas will be transmitted to a facility in Ashkelon, in Israel, and from there will be transmitted to Egypt through the EMG underwater pipeline to El Arish, in north Sinai. From there the pipeline runs over ground west to Egypt.

It is not the first contact between Leviathan stakeholders Noble Energy and Delek and with Egypt's Dolphinus Holdings. Last March, the Tamar consortium--in which Noble Energy and Delek are also stakeholders--signed a contract with Dolphinus Holdings for an interruptible gas supply of a total of 5 bcm in three years for a minimum of $1.2 billion from Tamar gas field. This contract is not subject to the regulatory natural gas framework.

When it was signed the Tamar partners expected it to be implemented in a few weeks' time with a relatively small investment, of some $10 million to reverse the direction of gas flow on a pipeline that was used to import natural gas to Israel from Egypt. However despite the early optimism, the Israeli government has not yet approved the export contract. Delek and Noble are now expecting its approval following the approval of Israel's new gas framework, which is expected to be completed within a month.