Natural gas fuels 40 pct of Israel Electric power

JERUSALEM, July 22 (Reuters) - State-owned Israel Electric Corp (IEC) said on Wednesday 40 percent of its electricity was being generated using natural gas, a "revolution" aimed at reducing air pollution and cutting costs.

The company said this was part of a project it undertook five years ago when Israel was in talks with Egypt to secure the supply of natural gas from its Arab neighbour.

Israel and Egypt signed a 20-year gas supply deal in 2005. This, coupled with the discovery of large natural gas reservoirs off Israel's shores, widened the scope of IEC's switch from oil to gas.

IEC said in a statement that as of this week it was able to produce 3,700 megawatts of electricity from turbines powered by natural gas.

It said the increased use of Egyptian natural gas to produce power would save the company more than $1 billion over the next 20 years, money it would spend on developing infrastructure.

"We will continue to develop our ability to produce electricity using natural gas in order to make a significant contribution to air quality and the environment," said Yakov Hain, IEC's senior vice president of engineering projects.

In addition to gas supplies from Egypt, IEC also depends on supply from Yam Thetis, a consortium that produces natural gas at a site off Israel's southern coast.

Israeli media reported last week that Yam Thetis, which comprises Noble Energy (NBL.N), Delek Driling (DEDRp.TA) and Avner Oil Exploration (AVNRp.TA), was in talks to sell IEC five billion cubic meters of natural gas for $600 to $700 million. (Reporting by Joseph Nasr; editing by James Jukwey)