Take-or-Pay agreement for the supply of natural gas over 15 years or up until the contracted quantity has been utilized (with an option to extend for an additional two years), was signed by the Tamar Partners with Alon Gat Energy Center LP.
The agreement is for the supply of up to a total quantity of 1.68BCM and entitles an option to reduce the minimum annual amount it has committed to purchase or pay for it (Take or Pay), such that it will not exceed 50% of the average annual amount consumed during three years prior to exercising the option. In the case of option exercise, the remaining agreed amounts of natural gas to be supplied that were determined in the agreement will be reduced accordingly.
The consumers will be entitled to exercise this option, by providing notice to the Tamar partners during the period from the beginning of the fifth year of the supply of gas in commercial quantities or on January 1, 2018 (whichever is the latest), and this option will terminate at the end of the seventh year of the date of commercial operations or on December 31, 2020 (whichever is the latest). The estimated cumulative revenues from this agreement amounts to approximately US $ 400 million.
In the agreement, the gas price will be linked to electricity production rates as determined time to time by the Public Utility and Electricity Authority, and includes a “floor rate”. The supply of gas is expected to commence in the beginning of 2014. The agreement is subject to Antitrust Authority’s approval.
[mappress] LNG World News Staff, December 10, 2012