The parties aim to finalise a definitive agreement by the end of May 2021
The Tamar gas field began production in 2013. (Credit: QR9iudjz0 from Freeimages)
Delek Drilling has signed a memorandum of understanding (MoU) with Mubadala Petroleum to sell its stake of 22% in the Tamar gas field offshore Israel for up to $1.1bn.
As per the non-binding MoU, the consideration is made up of an unconditional payment of $1bn and a contingent payment of up to $100m, based on the meeting of certain terms and goals.
The companies will work towards signing a definitive agreement by the end of May 2021.
Discovered in 2009, the Tamar gas field located in the Levantine basin of the Mediterranean Sea has been in production since 2013.
The offshore Israeli field is operated by Chevron (25%), while its other participants include Isramco (28.75%), Tamar Petroleum (16.75%), Dor Gas (4%), and Everest (3.5%).
Delek Drilling is obliged to divest all of its holdings in the Tamar gas field by the end of this year in line with the 2015 Gas Framework outlined by the Israeli government. The gas framework aims at bringing in more competition to the gas sector in Israel.
Delek Drilling CEO Yossi Abu said: “This transaction has the potential to be another major development in our ongoing vison for Natural Gas commercial strategic alignment in the Middle East, whereby Natural Gas becomes a source of collaboration in the region.
“We are proud to have signed this MoU following the Abraham Accords Peace Agreement between Israel and the UAE.
“The development is not only a significant endorsement of the quality of the Tamar reservoir and the Levant basin but also a major support for the East Mediterranean Natural Gas sector.”
As per NSAI, January 2020, the 2P reserves in the Tamar lease, following the production of over 69.3 billion cubic metres of natural gas (BCM), is nearly 300BCM of natural gas and 14 million barrels of condensate.
The offshore field, which is located nearly 90km west of Haifa, is contained in water depth of up to 1,700m.
Gas from the field is produced through five wells and is transported via two 140km long pipelines that connect to the offshore Tamar platform for most of the processing work.
The gas is subsequently sent from the platform via a pipeline to the onshore terminal in Ashdod, and then into the Israeli market via the INGL national gas pipeline. Some volumes of the gas are exported to Jordan and Egypt.