* UFG's Egypt plant has been idle since 2013
* Egypt diverting gas from plant for domestic use
* Both sides hope for deal in 6 months: Nobel Energy
(Adds comment from Egypt's oil ministry, details on Damietta
TEL AVIV, May 6 The partners in Israel's Tamar
natural gas field said on Tuesday they had signed a letter of
intent with Union Fenosa Gas to export up to 2.5 trillion cubic
feet (tcf) of gas over 15 years to a liquefied natural gas (LNG)
plant in Egypt.
Tamar was discovered in the eastern Mediterranean in 2009
and holds an estimated 10 tcf of gas. The larger Leviathan field
was discovered nearby a year later and turned Israel into a
potential energy exporter.
Union Fenosa Gas has a stake in an LNG facility in Egypt's
Damietta LNG plant. The plant stopped operating last year due to
a lack of gas supply since the Egyptian government began keeping
its natural gas to meet surging domestic demand rather than
sending it to the plant for export.
Texas-based Noble Energy, which has a 36 percent
stake in Tamar, said both sides hope to finalise a binding
agreement within six months, though any deal will require
regulatory approvals in Israel and Egypt.
Egypt's oil ministry said it had asked for a meeting with
the head of Union Fenosa for details. "There will be no
agreements between any parties without the approval of the
competent Egyptian authorities," the statement said.
"Egypt has an integrated infrastructure for natural gas and
its transportation, liquefaction, and marketing either
internally or externally," it said.
A source close to the Israeli partners said if a final deal
is concluded the gas would be sent through a new subsea pipeline
which would have to be built.
The Damietta LNG plant is 80 percent-owned by Union Fenosa
Gas (UFG), a joint venture between Spain's Gas Natural
and Italy's Eni. The remaining 20 percent is split
evenly between state-owned companies EGAS and EGPC.
It is unlikely that there will be adequate supplies of
Egyptian natural gas for the plant in the near future.
Egypt is facing its worst energy crunch in years, due
largely to a gas shortage caused by dwindling production and a
lack of investment to tap major reserves. Current levels fail to
meet domestic demand and export commitments.
Cairo is scrambling to secure adequate fuel supplies to
avoid popular anger over power cuts. Gulf oil producers have
given Egypt a total of $6 billion in free fuel products to help
fend off unrest on its streets in the summer when consumption
The Israeli partners in Tamar said the price of the gas to
be sold to UFG will be similar to the price in other export
deals from Israel and based mainly on a linkage to Brent oil
Isramco Negev has a 28.75 percent share of Tamar,
Delek Drilling and Avner Oil both have
15.625 percent. Dor Gas Exploration holds the remaining 4
(Reporting by Ari Rabinovitch; Additional reporting by Maggie
Fick in Cairo; editing by Jason Neely and Jane Merriman)