IEC purchased gas abroad about 50% cheaper than the price of gas purchased in Israel

The IEC purchased nine liquefied gas (LNG) cargoes, totaling one billion cubic meters (BCM), about 20% of Israel's annual consumption of gas, already starting to arrive in Israel, the company paid $ 100 million.
The parties to the agreement may make price adjustments, which will be expressed on two dates: the first of July 2021, with the possibility of a 25% change in both directions; And the second, in July 2024, of 10%.
The purchases, under SPOT contracts, were made at an average cost of $ 3 per unit of heat, which is about 50% lower than the price of gas purchased by the electricity company Tamar and about 40% of the gas price it purchases from leviatan. The low price is due to large gas surpluses accumulated by the various energy companies, due to the slowdown in global economic activity.
The purchases are made at the expense of whale gas procurement (which itself is at the expense of transducer procurement), which is expected to hit the whale's partner revenues, Noble Energy, Drilling Fuel and its running in 2020. About a year and a half ago, HKI agreed with a whale on a $ 700-600 million temporary contract to purchase 3.5–4 BCM of natural gas between October 2019 and June 2021, with an annual volume of 1.5–2 BCM. This is not a binding contract, so SHAKI can waive part of the purchase in contractual quantity, and purchase from outside suppliers.
The electricity company consumes the liquid gas (LNG) by using a marine buoy located 10 km offshore, opposite its room. The buoy was established in 2013 at a cost of half a billion shekels. The buoy allows to diversify the sources of gas supply to the state - and in fact, it can provide about one third of the consumption. Once the shipment arrives, the buoy is mounted and connected to the ship, after the connection is completed, a gasification process during which the LNG is heated and transforms from a liquid accumulation state to gas, from where the gas is fed to the national transmission system.
The Corona crisis has led to a worldwide price drop in the gas sector. Spot gas prices in Europe have recently plunged to lows - which are ridiculing the gas tariffs being paid in Israel. For example, in the Netherlands, gas futures for June are now trading at $ 1.2 a unit of heat; And in the UK, the price of gas plunged to $ 1.3 per unit of heat. In the US, gas prices continue to plummet - $ 1.7 in Henry Hub. That is, world gas prices are 70% to 80% lower than the price of gas in the main contract with Tamar.
At the end of April, Morgan Stanley's oil and gas strategist estimated that the gas market in Europe was on its way to negative prices this summer - similar to its negative oil prices during April. In the Bank's estimation, European gas prices will continue to suffer from pressure in the coming months due to surplus supply on the continent - partly due to the Russian and American gas market flooding and fall in demand in the summer. However, as storage space in designated containers in Europe continues to shrink. The continuing decline in contract prices supports the forecast.
Last week, the agreement also reached a compromise between Isramko and Tamar Petroleum and Delek and Noble, according to which Tamar will sell another 1.5-1.2 BCM of gas to the HK in the next two years at a price of about $ 4.3 per unit of heat - at the expense of the HKI gas purchase from a whale. This, after Noble and Delek agreed to waive their veto rights. However, it is still a costly price in relation to gas prices in the world today - so IHI may continue to prefer to buy a large portion of the gas overseas - rather than a transducer (as is now the case with a whale pool), so contract purchasing volumes are expected to be low. The agreements are still subject to the approval of the directors.
The non-Nobel or Fuel partnership recently concluded an agreement with HIM to sell transducer gas - but Fuel and Nobel torpedoed the agreement. After Delek and Noble blocked the deal and vetoed it due to their cross-ownership of the whale, the partnership in Tamar turned to the competition manager. The Deputy Commissioner and Deputy Attorney General Meir Levin ruled that fuel and Nobel could not hold veto rights in Tamar, and instructed the parties to reach understandings in a similar vein. Under the Competition Authority's directive, if the parties fail to reach an understanding, the government will issue a decision in this spirit.
The electricity company is currently preparing to update the gas price in a contract with Tamar, signed in 2012. The parties to the agreement may make price adjustments, which will be expressed on two dates: the first of July 2021, with the possibility of a 25% change in both directions; And the second, in July 2024, of 10%. It is estimated that HKI is working to require a 25% discount transducer, in excess of the rate specified in the contracts.