Oil Refineries Ltd. (ORL) gained the most in almost two months on bets the natural gas supply from the Tamar field offshore Israel will cut production costs at the country’s largest refiner.
The shares gained 2.8 percent, the most since Feb. 11, to 1.977 shekels at 1:13 p.m. in Tel Aviv. The stock led gains in the benchmark TA-25 index which slid 0.1 percent today.
The Tamar offshore field started production on March 30, supplying Israel with natural gas and saving a projected 1 billion shekels in energy costs a month, according to Israel’s Ministry of Energy and Water Resources. The flow from Tamar will probably contribute about 1 percentage point to Israel’s gross domestic product, the Bank of Israel said in a March 24 report, forecasting that the economy will grow 3.8 percent in 2013.
“There is investor optimism around these shares as the gas supply from the Tamar field is expected to cut production costs,” Eran Yunger, an analyst at Migdal Capital Markets, said today by phone from Tel Aviv. The savings may amount to $130m a year for Oil Refineries, Yunger said.
The refiner’s shares have declined 1.3 percent this year compared with a 4.7 percent rise in the TA-25 index, as the company posted six consecutive quarters of losses, according to data compiled by Bloomberg. Oil Refineries has started a reorganization process including pay cuts and early retirement of workers.
Other energy-intensive companies that will benefit from the natural gas are fertilizer maker Israel Chemicals Ltd. (ICL) and Paz Oil (PZOL) Co., the maker of petroleum-based products, Yunger said. Israel Chemicals gained 0.4 percent today while Paz dropped 0.3 percent. Israel Electric Corp. said yesterday the gas flow from Tamar is expected to improve its cash flow.
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