Tel Aviv-Israel Chemicals Ltd. (ICL) said Dec. 13 that it has signed an agreement under which Egyptian supplier East Mediterranean Gas Co. (EMG) will supply natural gas to ICL’s manufacturing plants through the year 2030. This agreement is in addition to the gas purchase agreement that ICL signed with the Yam Tethys group in 2008, and follows the connection of its facilities to Israel’s natural gas pipeline in December 2009. This multi-year agreement secures the supply of natural gas to the company’s manufacturing plants that transitioned last year to the use of natural gas as their primary source of energy, a process that has led to a significant improvement in the environmental profile of the company’s manufacturing operations. ICL has agreed to purchase from EMG approximately 0.2 BCM of natural gas per year, a quantity which it will use to run a power plant that it may build in Sdom. In addition, ICL has secured an option until March 31, 2011, to purchase an additional 0.53 BCM per year, a quantity that will be used for the company’s manufacturing plants, as well as by the new power plant. The purchase of gas for the new power plant is dependent upon the company making a decision to build the power plant and upon the receipt of required building permits. These conditions are to be met by June 2012. The projected monetary value of the agreement through 2030 (net of options) is approximately $370 to $460 million. The calculation of this estimate utilizes current electricity prices and the “floor” and “ceiling” prices stipulated in the agreement.
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