Israel: National Planning Council Gives Green Light to FLNG Plan

Israel’s National Planning Council has given final approval for a plan to establish a floating LNG terminal off the country’s central Mediterranean coast, the council said on Wednesday.

The proposed terminal is to be located off the coast of Hadera. The terminal, which is due to be completed by the end of 2012, will serve Israel Electric Corp and other natural gas consumers and be a backup for local natural gas supplies. “The approval of the project is crucial and will guarantee gas supplies to the local economy until the Tamar offshore field comes online,” National Infrastructure Minister Uzi Landau said.

His ministry has been pushing the floating terminal option in order to deal with an expected shortage of natural gas possibly as early as mid-2012, and that concern has been exacerbated in recent months following the cutoff in gas supplies from Egypt. In addition, the sole local supplier, Yam Thetis, expects that its Mary B well off Israel’s southern Mediterranean coast will be depleted by 2013, though experts believe that it could well be sooner.

State-owned Israel Natural Gas Lines, which is in charge of the infrastructure for the project has tentatively selected Norway’s APL to supply it with the offshore buoy technology for the terminal. In June, Israel’s Public Utilities Authority (Electricity) approved a request by the IEC to lease an LNG tanker and set up infrastructure in order to bridge an expected gap in natural gas supplies in 2013. Earlier, in May, the IEC chose Houston-based Excelerate Energy as a sole supplier of LNG noting that it was the only company that could meet its very tight timetable for completing the planned project by the end of 2012.

Israeli energy industry sources said that the two companies are negotiating a supply agreement, and according to the plan the buoy will be located 10 km off the coast and will link up to a pipeline, which will transport the gas to the national transmission network. Earlier this week, Landau instructed the country’s Natural Gas Authority to freeze the planning for a permanent LNG terminal off coast of Hadera. Israel’s national infrastructure and finance ministries had originally planned for a permanent LNG terminal that would begin operation in 2015. In January 2010, the government’s tenders committee received six bids for the proposed permanent terminal: Israel’s Delek Energy jointly with Teekay LNG; Norway’s Hoegh; Norway’s Golar LNG; Excelerate Energy Inc; Southern Union Company along with BG Group and Japan’s NYK. But due to the situation with Egypt and the uncertainty over the exact timetable for delivery of gas from the Tamar field the two ministries decided on a floating terminal but continued planning for a permanent terminal. Meanwhile, ministry officials have said that plans for the permanent terminal will not proceed until the floating terminal is up and running and the situation and need for a permanent facility can be re-evaluated.