Noble, Delek, East Gas Co Strike $518M EMG Pipeline Deal
- Business & Finance
Noble Energy said it has executed multiple agreements to support delivery of natural gas from the Leviathan and Tamar fields, offshore Israel, into Egypt.
J. Keith Elliott, Noble Energy’s senior vice president, Offshore, stated: “Today’s announcements mark significant steps forward in supplying natural gas from the world-class Tamar and Leviathan fields to regional customers through existing infrastructure. They also represent another major milestone toward Egypt’s goal to become a regional energy hub, providing access to both growing domestic markets and existing LNG export facilities.
“With these agreements, we are securing the capacity to deliver on our firm gas sales agreement with Dolphinus for Leviathan while also allowing for interruptible sales from Tamar into Egypt. This further solidifies the strong cash flow growth anticipated from our Eastern Mediterranean assets.”
Noble Energy and partners (Delek Drilling and East Gas Company in Egypt) are acquiring an effective 39 percent equity interest in Eastern Mediterranean Gas Company, which owns the EMG Pipeline, for $518 million.
The EMG Pipeline is an approximately 90-kilometer pipeline located primarily offshore, connecting the Israel pipeline network from Ashkelon to the Egyptian pipeline network near El Arish.
Noble Energy will own an effective, indirect interest in the pipeline of approximately 10 percent.
In addition, and upon closing of the transaction, Noble Energy and partners will enter into an agreement to operate the pipeline, securing access to the pipeline’s full capacity. Technical evaluation and flow reversal planning work on the EMG Pipeline is ongoing.
Noble’s estimated acquisition costs are said to be approximately $200 million, expected to close in early 2019. Delek said the cost would be some $185 million, for its part as well as Noble’s, while the balance would be paid by the East Gas Company.
Initial gas delivery through the EMG Pipeline is expected to occur from the Tamar field to Dolphinus Holdings Limited in Egypt, under the company’s existing interruptible natural gas sales agreement. At startup of the Leviathan field by the end of 2019, the company anticipates selling at least 350 million cubic feet of natural gas per day, gross, to contracted customers in Egypt.
Noble Energy also secured an option for an additional route and capacity to transport natural gas within Egypt by entering into a definitive transportation agreement with the owner and operator of the Aqaba El Arish Pipeline. This agreement will support the transportation of additional quantities of natural gas to Egypt over and above the amounts through the EMG Pipeline.