Israel Natural Gas Lines Ltd. is considering selling bonds and partnering with foreign companies to fund a $1 billion infrastructure project as the nation seeks to become energy independent, Chairman Ron Chaimovski said.
The state-owned company is looking to issue euro- denominated bonds among other options including dollar notes to raise the cash by 2015, Chaimovski said in an interview at Bloomberg’s headquarters in New York yesterday. INGL, as the company is known, previously sold debt yielding as much as 4.5 percent maturing in 8 1/2 to 10 years in a local private placement, he said.
Israeli gas exploration companies and Houston-based Noble Energy Inc. (NBL:US) have discovered enough gas under the Mediterranean Sea over the past three years to supply the country’s needs for 150 years. The Tamar and Dalit fields are scheduled to start production this year, with output at the Leviathan field, the world’s largest find of its kind in a decade, starting three years later.
“It’s not enough to find the gas,” said Chaimovski, who is in New York to meet investors. “We can’t afford to make mistakes. We’re a young company, and that’s why we are seeking partnership with people with the experience to help us.”
The Bank of Israel raised its 2013 economic growth forecast for the nation to 3.8 percent in December, updating its outlook to include natural gas production. That month Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, said it would pay as much as $2.3 billion for a 30 percent stake in the Leviathan field.
Delek Group Ltd., which has stakes in the Leviathan field through two units, advanced 1.6 percent to 950 shekels yesterday in Tel Aviv, the highest price since December 2010. The stock added 22 percent last year, beating the 7.2 percent return of the TA-100 index. Avner Oil Exploration LLP, a subsidiary of Delek, slipped 0.1 percent to 2.52 shekels.
On the New York Mercantile Exchange, gas futures for March delivery rose 2.4 percent to $3.306 per million British thermal units. Prices were up 36 percent from a year ago.
INGL is working on other natural gas projects that could cost as much as $15 million to fund, Chaimovski said. About two- thirds of that would be spent on a terminal to export gas to Middle East neighbors, Asia and Europe, he said.
“Export is essential to bring investors,” Chaimovski said. “There’s no way the government can spend $10 billion, and this will have to be done with large and trustful partners.”
INGL also plans to start construction this year of a maritime grid in the Mediterranean where developers can lease space and have pipelines transport the gas for them. Another project under way is a storage solution for the gas, he said.
The company is in talks to have its bonds listed on the Tel Aviv Stock Exchange as soon as this year, and an equity listing may follow, Chaimovski said.
Chaimovski was the Israeli Economic Minister to North America from 1998 to 2001 and also served in the country’s navy. He co-founded Argyle Security Inc. (ARGL:US) and served as its co-chief executive officer from 2005 to 2009.
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