Eni’s Zohr find no barrier as Israel starts Egypt gas export talks

TEL AVIV (Bloomberg) -- Israel’s natural gas companies have started talks about exporting gas to Egypt, three months after the largest ever natural gas discovery in Mediterranean waters seemed to threaten regional sales. Stocks in Israeli explorers gained.

Partners in Leviathan field, Israel’s largest, have agreed to enter non-binding negotiations with Dolphinus Holdings Ltd. in Egypt to supply as much as 4 Bcm of natural gas annually for a period between 10 and 15 years, according to a Tel Aviv bourse statement. Dolphinus is a consortium of large, non-governmental gas consumers and distributors headed by Egyptian businessman Alaa Arafa.

“This shows that Israel’s natural gas discoveries will play a crucial role in building the Eastern Mediterranean region as a major energy hub,” Yossi Abu, Delek Drilling LLP CEO, said in a phone interview. “Egypt has a huge need for gas, both for its economy and also for exports. Egypt is likely to become a regional hub for oil and natural gas and the Leviathan and Tamar fields are going to play a major role in making that happen.”

The talks signaled to investors that fears about the demise of Israel’s natural gas exports may have been premature. Shares of the explorers tumbled in late August as analysts said Eni SpA’s discovery would meet Egypt’s domestic demand. They recovered as Prime Minister Benjamin Netanyahu worked to finalize the long-delayed regulation of the industry, allowing for development of Leviathan.

Egyptian Oil Ministry spokesman Hamdy Abdel Aziz and EGAS Chairman Khaled Abdel Badie didn’t respond to requests for a comment. Egypt has said before that the government must approve any deal to import gas from Israel.

The TA Oil & Gas index rose 2.8% to the highest in more than two weeks at 10:54 a.m. local time. Ratio Oil Exploration 1992 LP, Israel’s most traded stock this year, led the gains with a 5.7% increase.