Well-deserved: Gaza attacks reduce demand for Israeli gas
"The third quarter estimate also included a reduced assumption for natural gas sales in Israel as a result of the ongoing conflict," said Noble Energy Inc. (NYSE: NBL) in its guidance for the next quarter published with its second quarter results.
Talking to analysts after the results were published Noble Energy COO David Stover who becomes CEO later this year said, "The Tamar field showed strong performance in the first half of 2014 and was unable to operate for just a total of 30 minutes. We see higher sales in the third quarter although as said with a slight moderation in our estimates as a result of the regional situation."
Stover added that contrary to reports on the subject no agreement to sell gas to Spanish company Union Fenosa will be signed before the end of the year. According to a Memorandum of Understanding (MOU) signed in May, Tamar will supply 4.4 BCM of gas annually, about 50% of the gas in Tamar, over 15 years - worth an overall $20 billion. Noble has also signed an MOU with BG to supply 7 BCM annually from Leviathan. Both deals will be delivered by pipeline (built by the customers) to the companies' Egyptian FLNG installations for sale to Asia.
Stover added, "We are close to signing deals for Leviathan with other customers."
If Noble Energy and its partner Delek Group Ltd. (TASE: DLEKG) fulfill their development plan then gas production from Israel's fields will increase from its current 1 BCM annually to 3.6 BCM by 2017/2018 when the Leviathan field will come on-stream.
Stover added that the current Tamar pipeline has on several occasion reached its full capacity due to high demand in Israel and that gas can only be supplied to other customers on an ad-hoc basis until the compression project allows the system to increase capacity by 25%.
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