The partners in Israel’s Leviathan gas field signed a non-binding letter of intent (LOI) in which they confirmed their intent to negotiate an agreement for the supply of natural gas from the Leviathan project to BG, in order to supply BG’s LNG plant in the Idku city in Egypt, Delek said in a statement.
The LOI includes several commercial conditions for the agreement. The estimated scope of the agreement is for the supply of 7 BCM (billion cubic meters) per annum for a period of 15 years. The supply of gas will take place from the FPSO and planned to be connected to the LNG facility through a subsea pipeline. According to the LOI the price of gas sold in the agreement will be determined in a formula as to be agreed by the companies.
“ It is clarified that the LOI is not binding (except for exclusivity for a certain period as agreed in the LOI) and the transaction stated above shall be subject to completion of negotiations between the parties and signing of the Binding Agreement. As of the date of this report, the parties estimate that the Binding Agreement will be subject to several contingent terms, including the development of the Leviathan Project, which is subject inter alia to binding final investment decisions by each of the Leviathan Partners and to receipt of all required approvals from the authorities in Israel and Egypt ,” the statement said.
Noble Energy is the operator of the Leviathan project with a 39.66 percent stake. Avner Oil and Delek Drilling, subsidiaries of Delek Group, hold a combined 45.34 percent, and Ratio Oil has the remaining 15 percent.