Cyprus Mail

Possible Delek pull back over interim gas supply

Leviathan, located about 80 miles (130 km) west of Haifa, was discovered in December 2010 and is scheduled to start producing by the end of 2019.

By Elias Hazou
ISRAEL’S Delek group, a strong contender for supplying Cyprus with natural gas, may now have to take a backseat to other bidders due to complications in its Israel operations.
The tender put out by Cyprus’ Natural Gas Public Company (DEFA) calls for the supply of between 0.7 and 0.95 billion cubic metres of natural gas annually to the Cypriot market through two delivery routes.
One route will begin supplying gas in early 2016 and the other no later than the second half of 2017.
Delek proposed the construction of a pipeline from the neighbouring Leviathan field to Cyprus.
But Noble Energy, Delek’s partner in Leviathan, announced recently it will delay taking the final decision on developing the field.
Noble had been expected to announce its development plan for Leviathan in September, with the date now pushed back for an indeterminate amount of time. Under the previous timetable, Leviathan was believed to be coming online in 2017.
The delay means that Leviathan gas will likely not be available by the time Cyprus expects deliveries – potentially throwing into question Delek’s whole bid.
Earlier this month, DEFA announced it had finished assessing the commercial and financial proposals submitted to it, and would commence direct negotiations with “a number of bidders.”
Reports say that four bidders are still in the running: Dutch energy firm Vitol; Greek conglomerate M&M made up of the Mytilineos & Vardinoyiannis (Motor Oil) groups in cooperation with Dutch giant Trafigura;
a conglomerate under ‘Socar’ – the state liquefied gas company of Azerbaijan; and Delek.
Reports say that the prices quoted to DEFA are higher than those desired, but that there is a window for bringing them down during the negotiations.
Cypriot authorities are understood to have set a purchase target of $12 per million BTU. The offers submitted by the bidders reportedly hover around $13 or $13.5 per million BTU.

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