Green light for offshore gas storage tank

Tank off coast of Hadera to allow new players to enter Israeli market. Israel Natural Gas Lines expected to raise additional NIS 2 billion through institutional bond placement

Lior Gutman, Calcalist |Published: 08.04.11 , 08:09

The National Council for Planning and Construction gave the thumbs up to a plan for an offshore gas storage tank off the coast of Hadera that will serve as a national emergency reserve.

The plan has been promoted during the past year by Israel Natural Gas Lines and the Ministry of National Infrastructures.

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The buoy is designated to serve two purposes: Firstly, as a reserve in the event of a sudden shortage such as in the case of the suspended supply of gas from Egypt; secondly, it will allow new suppliers to enter the Israeli market: tankers carrying liquid gas will be able to hook up to the tank, discharge their cargo and sell it on the Israeli market.

Among the foreign companies who were named are US Accelerate, Norwegian Golar and French GDF.

According to the plan, the buoy will be located about 10 km of the coast of Hadera and will have a 1.5-2.5 BCM capacity of natural gas, which is the equivalent to half of the economy's demand in 2010. A smaller maritime connector positioned 2.5 kilometers (1.5 miles) offshore will connect between the buoy and the national supply line.

The advantages of the project are the short construction period of a year and relatively low installation costs of some $80-120 million. Israel Natural Gas Lines a month ago called an international tender for the construction of the buoy and plans are to have the buoy operational by late 2012.

Calcalist has learned that Natgas is also expected to raise another NIS 2-2.5 billion ($590-730 million) through a private bonds placement, planned for the fourth quarter of 2011, aimed mainly at institutional investors. Most of the funds are earmarked for the funding of the company's business in the next three years.

Israel Natural Gas Lines has completed an institutional bonds placement in December 2009 in which it raised NIS 200 million ($58 million). In December 2010, the company repeated the move whereby it raised NIS 300 million (88 million).