Israel mulls LNG purchase as regulator declares emergency

Israel may be looking to snap up spot LNG in the coming weeks as the Natural Gas Authority regulator (NGA) declared emergency throughout a period of maintenance at its sole supplying offshore field, Tamar, the authority confirmed to ICIS on Thursday.

Constantine Blyuz, the NGA’s deputy director, said the Israel Electricity Company (IEC), the country’s electricity generation and utility and thus only LNG buyer, had purchased two cargoes for delivery throughout the Tamar field outage which has been scheduled between 19 September and 31 October.

The 138,000 cubic metre (cbm) British Merchant chartered by BP is expected to reach Hadera, in Israel, where IEC’s chartered floating import terminal is located, on 10 September, according to LNG Edge.

Blyuz said another cargo was likely to arrive in the first week of October.

“We believe the two will be enough, but if there are any small cargoes in the area, IEC might be interested in discussing with sellers for a potential spot deal,” he said.

Production at the Tamar field is expected to drop by an estimated 50% during the outage, feeding only around 15 million cubic metres (mcm)/day to the domestic market.

Output will be cut for approximately 20 days during the period, as the field will undergo two periods of maintenance.

“We don’t know the exact dates for the outages, but we expect them to be over by 15 October. However, to be on the safe side, we’ve quoted the [outage] period between 19 September and 31 October,” he explained.

Emergency

The source also confirmed that the outages were declared as emergency to signal that there may not be enough gas throughout the maintenance period.

Earlier this year, the government introduced emergency state regulations, based on the Natural Gas Law, including for periods of maintenance.

Gina Cohen, gas expert and lecturer at the Technion University said the extreme declaration of emergency times in the natural gas market by the regulator was a reflection of the fact that there was only one field so far connected to the Israeli market.

“Two more fields – Leviathan and Karish – are moving ahead each at their own pace. However, there are still a host of issues to be solved,” she said.

“Three of the most prominent issues include: increasing gas consumption in the market which can easily be accomplished by reducing coal consumption and using local produced natural gas; developing the transmission and distribution infrastructure to the areas of demand especially in the south; ensuring there are no hurdles in bringing Leviathan to the designated northern entry point.”

Failing this, Cohen said, Israel could be inflicted by recurring emergency declarations which are not befitting of a mature and transparent natural gas market.

“At the end of the day, the state’s motivation should be to focus on increasing the number of gas fields (exploration & development) in order to achieve security of supply and meet the objectives determined by the regulators.” aura.sabadus@icis.com