Collapse of Tel Aviv gas talks revives Idku terminal project

11 January 2008
The breakdown in negotiations between the UK’s BG and Tel Aviv on the sale of gas to Israel from Gaza could breathe fresh life into proposals for a liquefied natural gas (LNG) terminal at Idku in Egypt.

BG is set to close its Israel office at the end of January following a breakdown in talks with Israel after 18 months. They had been discussing the sale of gas from the Gaza marine field, in which BG holds a 90 per cent stake.

“There was no prospect of progress on the sale of gas to Israel,” says a BG spokesman. “There were fundamental differences on price, the flow of funds and gas supply to power projects in Gaza.”

Tel Aviv’s position is understood to have changed little since the earlier breakdown of negotiations in mid-2006, when it offered to pay $3.10 a million BTUs against an international price of $7-10 a million BTUs.

The gas earmarked for Israel could now be used to provide half the feedstock for a proposed third LNG terminal at Idku on the Mediterranean, which has been on hold because of a lack of gas.

BG has a 35.5 per cent stake in the first train and a 38 per cent stake in the second. If used, the gas will be piped to El-Arish in Egypt. “We are still considering our options,” says the spokesman.

BG is also set to relinquish its 35 per cent stake in the offshore Med Yavne concession without compensation.

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