Noble Energy and its partners have signed a Letter of Intent (LOI) to sell natural gas from the Tamar field, offshore Israel, to Israel Electric Corporation Limited (IEC). According to the LOI, IEC expects to purchase at least 95 billion cubic feet per year with the potential to procure significantly higher quantities for a period of 15 years beginning at the startup of Tamar.
The annual revenue under this LOI is estimated to be between $400 million and $750 million and will ultimately depend on the actual quantity of natural gas purchased and the price received, which is affected by oil pricing at the time of sale. Total revenue for the 15-year period is currently estimated by the Company to be approximately $9.5 billion using expected sales volumes and prices calculated with current oil futures' prices.
Charles D. Davidson, Noble Energy's Chairman and CEO, said, "We are very excited about the execution of this letter of intent with the IEC, which is a very important step in the continuing development of the Tamar project. The progress on both the development and marketing of Tamar continues to move us along towards first production in 2012, consistent with our original projections."
The Company and its partners have now signed LOIs for natural gas sales from Tamar with cumulative total revenues estimated at $10.5 billion. The LOIs will be followed by the negotiation and execution of definitive agreements by the parties. Additional discussions are ongoing with a number of potential customers regarding the supply of natural gas from Tamar, where the Company estimates total gross mean resources of 6.3 trillion cubic feet.
As part of a separate LOI, IEC expects to purchase natural gas from the Company and its partners to establish a strategic inventory reserve at Mari-B. The Mari-B partners would provide IEC with injection, storage and withdrawal capabilities for this inventory under a related service agreement.
Noble Energy operates Tamar, offshore Israel in the Matan license, with a 36 percent working interest. Other interest owners are Isramco Negev 2 with 28.75 percent, Delek Drilling with 15.625 percent, Avner Oil Exploration with 15.625 percent and Dor Gas Exploration with the remaining four percent.
The Company is also the operator of Mari-B with a 47.059 percent working interest. Delek Drilling has a 25.5 percent interest, Avner Oil Exploration holds 23 percent and Delek Investment has 4.441 percent.
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