Please ensure Javascript is enabled for purposes of website accessibility

Israel and Jordan Sign Gas Deal

By Oilprice.com – Feb 22, 2014 at 10:05AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The two countries have just signed a deal that will supply Jordan with $500 million worth of natural gas over 15 years.

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out this recent article:

Israel and Jordan signed a deal on February 19 in which Israel will supply Jordan with $500 million in natural gas over a 15-year period. The deal could be merely the first step, however, in a partnership that could potentially expand to an astonishing $30 billion. The gas will come from Israel's Tamar natural gas field offshore in the Mediterranean and deliveries are expected to begin in 2016.

The gas will be sent to Arab Potash, a Jordanian fertilizer company. Jordan has few indigenous energy sources, relying on neighbors to fuel its economy. For Jordan, the deal with Israel will make up for the shortfall of lost energy supplies that it imported from Egypt, which have been disrupted because of political turmoil and violence.

Israel too has long been vulnerable due to a lack of energy resources of its own. For this reason, the discovery and the ultimate extraction of natural gas from the Mediterranean has not only been about economics, but security as well.

Noble Energy, based in Texas, owns 36% of the Tamar field. Its other partners include Israel's Delek Group. Lawson Freeman, Noble's Eastern Mediterranean vice president commented on the significance of the agreement, "this deal will pave the way for additional export projects which could enhance regional cooperation as well as provide additional supply to the domestic market and enhanced security of supply through development of additional reservoirs and infrastructure."

Extraction of the Tamar field, which holds an estimated 8.5 trillion cubic feet of natural gas, began in March 2013. There is also the Leviathan field west of Haifa, a field that holds nearly twice the amount of natural gas reserves as Tamar, and Israel expects it will begin supplying gas in 2016.

The deal includes a floor price of $6.50 per thousand cubic feet, with an upside linked to the price of Brent crude. The talks had been nearly completed but held up for months as the two sides haggled over pricing details.

Israel and Turkey are also exploring potential gas deals as well, according to the Times of Israel.
 

Written by Charles Kennedy at Oilprice.com.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.