Israel's Tamar consortium is expected to sign a second major supply agreement in the coming days with Dalia Power Energies for the supply of 1 billion-1.4 billion cubic meters of gas annually for 19 years, industry sources said Wednesday.
The gas supply is for Dalia's private power plant in Tsafit, southern Israel.
"The agreement has been finalized and now just has to be approved by the Dalia Energy board of directors," one of the sources said. The value of the 19-year agreement is estimated at $3 billion to $3.5 billion.
In 2009, Dalia had signed a memorandum of understanding with the Tamar consortium -- Noble Energy, Delek Drilling, Avner Oil and Gas, Isramco and Alon Gas Exploration -- to purchase 5.6 Bcm of gas for a 17-year period. ]#
Dalia is building an 870 MW power plant which is due to come online in 2015, following delays. It will be the country's largest private power plant. The company is owned by Israel's Kibbutz movement, Hiram-Epsilon, Sigma Epsilon and the Israel Infrastructure Fund.
Last month, the Tamar consortium signed an agreement with Israel Electric Corp. for an initial supply of 3 Bcm/year with an option to increase volumes to 5 Bcm/year. The 15-year agreement is valued at $8 billion. The larger volumes are contingent on the opening of a second pipeline and receiving stations planned for Ashkelon, which are scheduled to come online in 2015.
Israel's Energy and Water Ministry is, however, pressing the Tamar partners to speed up the timetable for the receiving stations and complete them by the end of 2013.
The price of the IEC deal is estimated at $5.20-$5.30 per million BTU, sources said, adding that Dalia is expected to pay a slightly higher price.
Commercial production at the Tamar field located off Israel's northern Mediterranean coast is due to begin in the second quarter of 2013.
