Israel gas grid project takes new turn

04 October 2002

The Israel natural gas network project took a new turn in late September with a government decision to appoint state-owned Israel Electric Corporation (IEC)to build a significant portion of the estimated $400 million scheme. The move follows the government's August decision to cancel an agreement with an Israeli consortium that was awarded the contract to set up the gas grid earlier this year (MEED 23:8:02).

Deputy infrastructure minister Naomi Blumenthal on 1 October told MEED that IEC was selected because 'it has the resources to carry out a project of this size'. The company will be in charge of the construction and financing for several pipeline sections of the grid.

According to the latest government plans, IEC will be in charge of building an underwater link between the offshore Mari 2 field and the coastal city of Ashdod, and a pipeline linking Ashdod and the Gezer power station. In addition, IEC will set up and finance an offshore pipeline to Nakhsholim, north of Hadera, which will also have an exit to the 250-MW Reading power plant in Tel Aviv. The line will then run onshore to the 350-MW Hagit power station near Yokneam, southeast of Haifa. IEC's package is estimated to be worth $150 million-160 million.

Blumenthal says it is not yet decided whether the next stage of the project, expanding the grid into the south and further north, will be carried out by IEC, or whether it will be tendered on a build-operate-transfer (BOT) basis as initially proposed by the Infrastructure Ministry. The network is scheduled to come on stream in early 2004, with full operations set to begin in 2005.

The initial gas supplies will come from the concession operated by the Israeli Yam Thetisconsortium, which earlier this year concluded an agreement to supply 1,600 million cubic metres a year of gas to IEC. Talks about supplementing this with gas from offshore Palestinian and Egyptian fields are on hold, IEC says (MEED 11:1:02).

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