13 BCM of natural gas from the Leviathan Field for combined cycle natgas generation
Noble Energy’s (ticker: NBL) Tel Aviv-based partner in the Leviathan offshore natural gas field, Delek Group (ticker: DGRLY) reached an agreement with IPM Beer Tuvia Ltd. for the supply of natural gas, the company said in a press release Monday. IPM Beer Tuvia said it plans to use the natural gas to operate a power station in the Beer Tuvia Industrial Zone, a power plant which will use combined cycle gas turbines to power a total plant capacity of 413 Mwe.
Under the terms of the agreement, the Leviathan operators will supply IMB Beer Tuvia with 13 BCM of natural gas over the course of 18 years following the start of commercial operations at the Leviathan field, or until IMB Beer Tuvia consumes all 13 BCM, whichever comes first. The agreement also includes a provision to increase the contract length by two years, if the parties decide to exercise that option.
IMB Beer Tuvia agreed to a Take or Pay style contract with a minimum annual amount of gas. The company will be able to reduce the amounts purchased, including the overall contractual amount, up until the date of financial closure by IBM Beer Tuvia. The company will be able to reduce the minimum amount equal to 50% of the average annual amount that it actually consumed in the three years preceding the date of notice of exercising the option.
Delek estimates that the agreement is worth $3 billion, based on the company’s assessment of the price and amount of natural gas that will be purchased during the supply period. The contract includes a floor price, and indexed to the electricity production price, according to the press release.
Delek also announced that it signed a similar agreement involving the various parties involved in the Tamar natural gas field to sell a similar amount of natural gas to IMB Beer Tuvia over a 15 year period. The company said, however, “In the light of the current supply capability from the Tamar Project and taking into account the terms of the agreement, including the fact that the supply of gas under this agreement will be implemented inter alia for the amounts of gas that will be available to the Tamar Partners at that time following the supply of gas to other customers of the Tamar Partners, this agreement is not material for the company and the partnerships.”
