* Tamar floating LNG to produce 3 million tonnes per year
* Australia's Woodside had bought into key offshore gas
* Deal may boost Gazprom's case for monopoly on LNG exports
By Melissa Akin and Tova Cohen
MOSCOW/TEL AVIV, Feb 26 Russian energy group
Gazprom said it is in exclusive talks to buy liquefied natural
gas from the Tamar field off Israel's coast, which could
strengthen its hand in the booming Asian LNG market.
Russian President Vladimir Putin last week reiterated his
call for increased efforts in LNG to diversify Russia's gas
exports, which are focused on the weak European market.
A deal to buy liquefied natural gas from Israel would enable
Gazprom, the world's biggest conventional gas
producer, to export directly to high-priced markets in Japan,
South Korea, China and India, currently inaccessible via
The Tamar project under discussion would liquefy gas from
Israel's Tamar and smaller Dalit fields at a floating
liquefaction vessel at a rate of 3 million tonnes per year over
20 years, the companies involved said on Tuesday.
That equates to 84 billion cubic metres of gas over the
20-year period, roughly 30 percent of Tamar's estimated reserves
of 274 bcm.
The project would aim to start LNG deliveries in 2017.
Tamar is one of two major recently found gas fields off
Israel that are due to start production in the next few years,
the other being the bigger Leviathan field.
Gazprom Marketing & Trading and Levant LNG Marketing Corp,
the marketing agent for the Tamar project, signed an agreement
for exclusive, non-binding talks, the companies said. The
parties had signed a letter of intent in March to begin
Gazprom faces stiff competition in the global LNG market
from Qatar, the world's largest producer, as well as Australia,
which could overtake Qatar as the top producer by 2020.
In 2011 Russia ranked as the world's eighth biggest LNG
exporter, according to the International Gas Union.
South Korea's Daewoo Shipbuilding & Marine Engineering Co.
has agreed with field partners Noble Energy
of Texas, Israel's Delek Group and Isramco Negev
to develop Tamar via floating production, storage and
Ella Fried, an analyst at Leumi Capital Markets, said there
were still issues to be resolved before LNG exports could begin.
She noted that while the recommendations of a
government-appointed committee allowed for LNG exports from
Tamar, the Israeli government had yet to adopt these
recommendations. Indeed, a government coalition has yet to be
formed since an election was held in January.
"Also, floating LNG (FLNG) platforms are still in the
development stage around the world," Fried said.
Delek subsidiary Delek Drilling said Levant and
Gazprom would hold exclusive talks for six months with the aim
of reaching a binding agreement. The price for the LNG would be
linked to the price of Brent.
Gazprom Marketing & Trading will provide financial support
to Levant to develop the FLNG project by way of an equity
investment or financing. The amount would be significant but has
yet to be agreed by the parties, Delek said.
Development of the Tamar and Leviathan fields will make
Israel less dependent on energy imports but the country has said
it will also allow a significant amount of its natural gas to be
In a deal that appeared to challenge Gazprom's ambitions to
boost its position in the global LNG trade, Australia's Woodside
Petroleum announced late last year it would buy a 30
percent stake in even larger Israeli gas project, Leviathan.
Gazprom had also bid for the Leviathan stake.
Russia has only one export plant for now, operated by
Gazprom, Royal Dutch Shell and Mitsui at
Sakhalin-2, which supplies India and South Korea and spot
cargoes to Japan.
However, last week Gazprom said it had decided to build an
LNG plant near Vladivostok in Russia's Far East with a view to
supplying the Asia-Pacific region.
The company is also fighting to retain its monopoly on
Russian gas exports in the face of calls from rivals for rights
to export LNG, which is a grey area under Russian legislation.
The Israeli contract may help boost its case.
The partners in Tamar, which contains an estimated 9.7
trillion cubic feet of gas (274 billion cubic metres), said any
LNG exports would not affect planned supply from the field to
the Israeli market, which is expected to begin in April.
Tamar has already signed a number of large deals, including
one to supply as much as $23 billion of natural gas to
state-owned utility Israel Electric Corp and $4
billion worth to units of conglomerate Israel Corp.
Delek and Noble are also partners in the Leviathan gas
field, which has estimated gas reserves of 17 tcf and is
expected to be online in 2016.