May 6 (Bloomberg) -- Noble Energy Inc. plans to sell gas from Israel’s Tamar field to Union Fenosa Gas SA for its liquefying facility in Egypt, enabling the fuel for export.
Noble and Union Fenosa Gas signed a non-binding agreement of intent to dispatch as much as 2.5 trillion cubic feet of gas from Tamar to the plant over 15 years, according to a Noble statement e-mailed late yesterday. The offshore Tamar field holds an estimated 10 trillion cubic feet of gas.
The accord follows recent deals to sell Israel’s gas to Jordan and the Palestinian Authority, as the nation’s newfound fuel resources enable it to develop energy ties with Arab neighbors with whom it has relations. The discovery of the Leviathan and Tamar fields has been a bonanza for Israel, which expects the gas to meet its needs for a quarter of a century and also allow exports.
“Building on the recent agreements with the Palestinian Power Generation Co., as well as the Arab Potash and Jordan Bromine Companies, this agreement continues to demonstrate our ability to accelerate value and strengthen economic growth for stakeholders across the Eastern Mediterranean region,” Noble Senior Vice President for the Eastern Mediterranean Keith Elliott said in the statement.
The price of the gas will be similar to that in other regional gas sales from Israel and will be mainly linked to Brent prices, Houston, Texas-based Noble said. A target of six months has been set to reach a binding final agreement, subject to regulatory approvals in both countries, according to the statement.
Along with Noble, the Tamar site is owned by Israel’s Delek Drilling-LP, Isramco Negev 2 LP, Avner Oil Exploration LP and Dor Gas Exploration. The Tel Aviv stock exchange is closed today for Israel’s independence day.
Union Fenosa Gas’s LNG plant at Damietta, Egypt is owned by unit Segas, according to the company’s website. Union Fenosa Gas holds 80 percent of Segas, with its Egyptian partners holding the remainder.
Egypt used to export gas to Israel until a series of bombings directed against the Sinai supply pipeline led to its closing in 2012. Relations between Israel and Egypt had deteriorated after the overthrow of former President Hosni Mubarak in 2011, and his eventual replacement by Muslim Brotherhood leader Mohamed Mursi. The ouster of Mursi last July by the Egyptian army has led to better ties with Israel.
The gas will be supplied via a point to be determined at the border between Israel and Egypt, Delek and Avner said in a filing to the Tel Aviv Stock exchange late yesterday. Noble said in a presentation last December it may build an undersea pipeline from Israel’s offshore gas sites to Egypt, avoiding the riskier Sinai overland route.