The partners in Israel’s Tamar natural gas field said on Tuesday they had signed a letter of intent (LOI) with Union Fenosa Gas (UFG) to export up to 2.5 trillion cubic feet (tcf) of gas over 15 years to liquefied natural gas (LNG) plants in Egypt.
Tamar was discovered in the eastern Mediterranean in 2009 and holds an estimated 10 tcf of gas. The larger Leviathan field was discovered nearby a year later and turned Israel into a potential energy exporter.
UFG has an 80 percent stake in an LNG facility in Damietta and has been having production trouble since the Egyptian government began keeping its own natural gas for domestic use rather than sending it to the plant for export.
Texas-based Noble Energy, which has a 36 percent stake in Tamar, said both sides hope to finalise a binding agreement within six months, though any deal will require regulatory approvals in Israel and Egypt.
A source close to the Israeli partners said if a final deal is concluded the gas would be sent through a new subsea pipeline which would have to be built.
Egypt, facing its worst energy crunch in years, is scrambling to secure adequate fuel supplies to avoid popular anger over power cuts.
The Israeli partners in Tamar said the price of the gas to be sold to UFG will be similar to the price in other export deals from Israel and based mainly on a linkage to Brent oil prices.
Isramco Negev has a 28.75 percent share of Tamar, Delek Drilling and Avner Oil both have 15.625 percent. Dor Gas Exploration holds the remaining 4 percent.