Tamar Partners To Pay $380 Million To Use Yam Tethys Facilities

The partners in Israel's offshore Tamar natural gas field said they will pay $380 million to use the gas processing facilities of the Yam Tethys consortium, which operates two offshore gas fields, thus allowing the Tamar partners to meet their goal of starting natural gas production next year.

According to the agreement, the Tamar partners will use the compression system, pipelines, natural gas terminal and other facilities belonging to Yam Tethys, which operates Israel's only currently producing gas field. The agreement will allow the partners in Tamar to use the facilities until Dec. 15, 2015. Partners in Tamar will also have the right to build more gas storage facilities at the Yam Tethys site.

There is a large overlap in the ownership of Yam Tethys and Tamar. Houston-based Noble Energy Ltd. (NBL) owns 36% of the Tamar field. Delek Group Ltd. (DLEKG.TV) subsidiaries Avner Oil Exploration (AVNRL.TV) and the Delek Drilling Ltd. Partnership (DEDRL.TV) each own 15.6%, with several other companies sharing the remaining stake.

In Yam Tethys, Noble owns 47%; Delek Drilling holds 25.5%; and Avner owns 23%.

Both the private sector and the government have been eager to make sure Tamar begins production by next year.

The Yam Tethys consortium's field has been depleted more quickly than expected, and this, combined with the halt of natural gas deliveries from Egypt due to attacks on the Sinai peninsula pipeline, has increased the cost of electricity in Israel as producers have had to rely on more expensive substitutes for gas, including diesel.

The Tamar underwater field contains an estimated 9 trillion cubic feet of natural gas.

At 0817GMT, shares of Delek Drilling were down 0.23 shekels, or 1.6%, at ILS14.16 ($3.82), and shares of Avner were down ILS0.032, or 1.26%, at ILS2.49, in a higher Tel Aviv market.

-By Sara Toth Stub, Contributing to Dow Jones Newswires, [e-mail]