East Mediterranean Gas Co. (EMG) is denying any involvement in the US$1.2 billion deal made last week between the Tamar partners and Dolphinus Holdings to export natural gas from Israel to Egypt using the EMG pipeline.
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Tamar map. From Noble. |
In a letter written to the Tamar partners by its lawyer, Niv Sever from M.firon & Co., EMG said it “was surprised, once again, to read in the press about an agreement assuming the use of its pipeline for ‘reverse flow’ of gas between the Israeli Tamar Reservoir partners and Dolphinus Holdings Ltd. EMG is not a party to the reported deal and was not included in such negotiations.”
On 18 March, the Delek Group announced the seven-year deal between the Tamar partners and Dolphinus. As part of the contract, Delek said that Dolphinus is responsible for the transportation of the gas from Ashkelon to Egypt via the existing EMG gas pipeline, operated by EMG. In the first three years, 5 Bcm of gas is expected to be delivered. The two entities signed a letter of intent (LOI) in October 2014.
In the statement, EMG said that "the reported up-front costs of such an operation are unrealistic for a pipeline that has been out of operation for several years and that future operation to transport the reported interruptible quantities of gas for the reported duration would not be economical as far as EMG is concerned."
The notice to the stock exchange says that the agreement is subject to preconditions, one of them being an agreement with EMG.
According to sources, the Tamar group has not alleged that they have a deal with EMG, only that they believe that Dolphinus is in talks with EMG.
The Delek Group says that according to the agreement with Dolphinus, Dolphinus is responsible for the transfer of gas from Israel to Egypt, and Dophinus needs to sign a contract with EMG.
The Tamar partners told OE, "To the best of the knowledge of the Tamar partners, contacts are being implemented for the use of the EMG pipeline. The gas delivery point is in Ashkelon and therefore the Tamar partners are not part of the contracts between Dolphinus and the EMG company.”
Sources say that EMG was not party of any such negotiations and that the company has not been approached or negotiated anything.
As part of a 20-year agreement, Egypt had been selling gas to Israel, but the deal fell through in 2012 after months of attacks on the pipeline by militants in Egypt’s Sinai Peninsula and has been out of commission since then. This resulted in EMG suing the Egyptian government for damages, according to a Reuters reports.
Partners in the Tamar project include Noble Energy (36%), Isramco Negev 2 (28.75%), Avner Oil Exploration (15.625%), Delek Drilling (15.625%), and Dor Gas Exploration (4%).
Read more:
Dolphinus strikes Tamar deal
Tamar, Dolphinus LOI to supply Egypt with gas
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