Israel takes emergency measures to shore up energy supplies

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, July 19 -- Israel Electric Corp. (IEC), strapped for supplies of natural gas following the recent attack on a pipeline from Egypt, will be allowed to use 500 million new Israeli shekels (NIS) ($145 million) for the purchase of emergency supplies of diesel fuel instead of power lines.

IEC Chief Executive Officer Eli Glickman asked Minister of National Infrastructures Uzi Landau for permission to divert the money to diesel purchases as the utility's own reserves will be used up by end-July. Without additional funding, IEC will reach the limit of its ability to meet electrical demand in August.

Landau originally budgeted the money for the construction of power lines, but he agreed to divert the funding to the purchase of diesel after Gluckman advised that construction of the new power lines could be postponed until 2012.

IEC also wants a similar redirection of NIS 880 million that is currently held by Israel’s Public Utilities Authority (Electricity) for the construction of power stations. Additionally, IEC believes it can raise a further NIS 400 million on the capital market.

Altogether, IEC will require NIS 3.7 billion in 2011 to purchase enough diesel to replace the shortfall in gas caused by disruptions in deliveries along the line from Al Arish in Egypt to Ashqelon in Israel.

The most recent bombing was the fourth in 6 months, cutting off badly needed supplies during the hot summer months when Israelis' increased use of air conditioning sends electricity demand off the charts (OGJ Online, July 18, 2011).

LNG terminal planned
Meanwhile, in an effort to shore up and diversify supplies over the longer term, a committee overseeing oil and gas facilities has approved an application by Israel’s Ministry of National Infrastructures for construction of a buoy that will serves as a terminal for LNG carriers.

IEC and the government are said to be working on the plan under a tight schedule due to the gas delivery disruptions, as well as the dwindling reserves of Yam Tethys and the likelihood that gas from the Tamar field will come on line only in early 2013.

“The speed at which the buoy and the other components are set up is critical, because it will provide a bridge to help Israel deal with the natural gas shortage anticipated by mid-2012,” said Landau.

While Israel’s National Planning and Building Commission is due to discuss and approve the plan, Natural Gas Pipeline Co. is preparing the tender for the buoy, which will be manufactured by Norway's Advanced Production and Loading AS at a cost of $80 million.

IEC plans to lease from Excelerate Energy Inc., The Woodlands, Tex., the ship that will be required to regasify LNG brought into Israeli waters. IEC is looking to offer Excelerate a contract that is exempt from a tender.

Contact Eric Watkins at [email protected].