Israel's Oil Refineries Limited said Wednesday that it has signed a two-day spot agreement to buy natural gas from the Yam Thetis consortium to replace supplies it was due to receive this month from Egypt.
Gas supplies from Egypt to Israel, Jordan and Syria were cut off last week following an explosion at a terminal near El Arish. It is unclear when supplies will resume.
Egypt supplies 40% of the gas to the Israeli market.
In December 2010, ORL signed a 20-year agreement with East Mediterranean Gas Company for 0.6 billion cubic meters of gas annually from Egypt, out of its total requirement of 1.1 billion cu m. The remainder is expected to be supplied by the Tamar consortium that comprises of Noble Energy, Delek Drilling, Avner Oil and Gas, Isramco and Dor Gas. At the time, Israeli energy industry sources said that ORL had hoped to begin widescale use of gas this month at its refinery and petrochemical plants.
The gas ORL gets from Yam Thetis will be used for trial runs at its 9.8 million mt/year refinery -- Israel's largest -- and its Carmel Olefins and Gadiv Petrochemical plants as the company attempts to switch from fuel oil to gas following the completion of the northern segment of Israel's national gas transmission network earlier this year.
An ORL spokesman declined to comment Wednesday on the terms of the spot agreement or whether the company would ink further deals with Yam Thetis for gas from the latter's Mary B well in the Yam Thetis field off Israel's southern Mediterranean coast.
But it is unlikely that gas from Yam Thetis -- which comprises Noble Energy, Delek Drilling and Avner Oil and Gas -- will be a long-term solution for ORL, as the Mary B well is expected to be depleted in 2013, or possibly sooner if production is ramped up. Mary B was forced to step up production in early February following an earlier cutoff of gas supplies from Egypt.
At the end of 2010, the well had estimated gas reserves of 11.4 billion cubic meters. Yam Thetis sold 3.25 billion cu m of gas from the well to Israel last year and is expected to reduces volumes this year to 2.7 billion cu m.
Last week, several Israeli natural gas consumers such as state-owned Israel Electric Corp. and Makhteshim Agan Industries locked in supply deals with Yam Thetis following last week's cutoff in supplies from Egypt.
