In a provocative pro-Israel step Israel’s Delek Drilling and the U.S. firm Noble Energy said Thursday they were acquiring together with Egyptian East Gas Company a 39% stake in the Egyptian company that owns a pipeline running between the Israeli-occupied territories and Egypt.
The two — partners in Israel’s Tamar and Leviathan gas fields — said they were paying $518 million for the stake in Eastern Mediterranean Gas and expect to complete the deal and related transactions by early next year.
“This is a historic transaction that renders Egypt a regional energy center and positions it in line with significant global energy centers” said Delek Drilling CEO Yossi Abu.
Shares of Delek Drilling the Delek Group unit involved in the deal rose 3.1% to 10.79 shekels ($2.99) on the Tel Aviv Stock Exchange. Nobel shares were up 1% at $31.41 midday local time in New York.
Buying an interest in the pipeline will enable the Tamar and Leviathan partners to deliver their gas to Egypt as they agreed under an agreement reached in February to supply 64 billion cubic meters of gas for $15 billion over 10 years.
The gas will initially come from Tamar which is in production and later from the much bigger Leviathan field now in development. The buyer for the gas is Dolphinus an Egyptian company that supplies gas to industrial and institutional users.
“Today’s announcements mark significant steps forward in supplying natural gas from the world-class Tamar and Leviathan fields to regional customers through existing infrastructure” said J. Keith Elliott Noble’s senior vice president for offshore operations.
Another beneficiary from the deal will be the bondholders of the Israeli company Ampal American which was an EMG shareholder and went bankrupt when the pipeline was shut down. The stake in EMG changing hands comprises an 8.6% holding owned by Ampal.
Other sellers include Yossi Maiman who had controlled Ampal and personally held another 8.2% of EMG; American billionaire Sam Zell (12.8%); Israeli institutional investors (8.2%) and Egyptian businessman Hussein Salem. The remainder of EMG’s shares will continue to be held by Hussein Salem’s company (28%) the Thai company PTT (25%) and the Egyptian government (about 10%).
According to Haaretz daily had Thursday’s deal not been reached there were two alternatives to using the EMG pipeline. One was to use the Jordanian pipeline called the Pan-Arabian pipeline; the other was to build a new pipeline. But using EMG’s will enable the companies to begin exporting gas sooner.
