30th Jun 2014 14:07
LONDON (Alliance News) - BG Group PLC reached a preliminary deal with the partners in Israel's biggest offshore natural gas field, the Leviathan field off Haifa, to possibly pay USD30 billion for a supply of gas through a subsea pipeline to its operations in Egypt.
The partners at the leviathan field, Delek Drilling Ltd, Avner Oil Exploration Ltd, Noble Energy Mediterranean Ltd and Ratio Oil Exploration Ltd said on Sunday that the preliminary deal was penned with BG Group on Friday.
The deal will see BG pay out USD30 billion for the supply through a subsea pipeline of roughly 7 billion cubic metres of gas per year over 15 years.
The Israeli gas will be pumped directly to BG's liquefied natural gas field in Idku, Egypt, which has recently struggled to keep up with demand due to gas shortages in the country.
"We are looking at a number of options for increasing the supply of gas to the Egyptian LNG facility and this is one of several currently under consideration. While this non-binding letter of intent with the Leviathan partners is a first step, it is very early days," a spokesman for BG Group said on Monday.
BG declared force majeure at their operations in Egypt during January, as low levels of gas kept the Idku plant from running at acceptable levels.
The Financial Times newspaper said on Sunday that a person with knowledge of the deal said the value was worth roughly USD30 billion, based on the price for the gas sold and not the price to build the pipeline.
However, all of the partners, along with BG, said the deal going forward is dependant on a range of conditions and may not be completed.
BG Group shares were down 1.3% to 1,230.50 pence, putting it in the top five FTSE 100 fallers on Monday.
http://www.ft.com/cms/s/0/7a51810a-ff6e-11e3-9a4a-00144feab7de.html?ftcamp=crm/email/2014630/nbe/UKMorningHeadlines/product&siteedition=uk#axzz367wRhIWZ
By Tom McIvor; [email protected]; @TomMcIvor1
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