Under the terms of the LoI, Leviathan partners will supply the 4 billion cubic meters (bcm) of gas per annum from Leviathan field to Dolphinus, for 10 to 15 years.
The natural gas will initially be transported to Ashkelon using the transmission system of Israel Natural Gas Lines (Natgaz) and then to the Egypt’s local market using the existing East Mediterranean Gas (EMG)-operated pipeline system.
The LoI is expected to serve as a basis for negotiating the binding agreement between the parties.
The gas price will be similar to that of other contracts signed and will be linked to the cost of Brent oil and includes a floor price, Delek Group said.
Subject to various approvals, the new deal will have no affect on negotiations between on potential gas supply deal between Leviathan partners and Britain’s BG Group for liquefied natural gas plant in Iduku, Egypt.
In 2014, Noble Energy agreed to sell natural gas from the Leviathan field to the National Electric Power Company (NEPCO) of Jordan in a deal, which is due to be finalized.
Noble Energy operates the Leviathan gas field with 39.66% stake while Delek Group subsidiaries Delek Drilling and Avner Oil Exploration have stakes of 22.67% each. Other project partners include Ratio Oil Exploration with 15%.
Planned to commence production in 2017, the Leviathan field is estimated to hold natural gas reserves of about 17 trillion cubic feet (tcf) as well as 600 million barrels of oil beneath the gas layer.
The deal is estimated to be worth $10bn over the 15 year period, reported Financial Times.
