Delek Mulls Over Up To $4B IPO of Tamar Gas Field Stake

Israeli conglomerate Delek Group Ltd is weighing the possibility to launch an overseas initial public offering (IPO) of its 31-percent stake in the large Tamar gas field offshore Israel, Bloomberg reported on Wednesday, citing people in the know.

Delek is considering spinning off its Tamar stake – valued at US$3 billion-US$4 billion - into a special purpose vehicle and list it in New York, London or Amsterdam. Although the group has held talks with HSBC Holdings Plc and JPMorgan Chase & Co, no final decision on an IPO has been made, and no banks have been formally hired to manage a potential deal, according to Bloomberg’s sources.

According to Delek’s second-quarter figures released on Tuesday, the Tamar gas field produced 2.3 billion cubic meters of natural gas in the second quarter, a record for a second-quarter production, compared with 1.8 billion cubic meters in the second quarter last year.

However, under Israel’s Natural Gas Regulatory Framework, Delek has five years to divest its stake in the Tamar field. The framework deal agreed by Delek and another large shareholder in Tamar, Houston-based Noble Energy (NYSE:NBL), was to address monopoly concerns and allow for the much bigger offshore gas project Leviathan to go ahead.

Last month Noble Energy sold 3 percent of its 36-percent working interest in the Tamar field to Israeli insurer Harel Group for US$369 million. Noble Energy, which is selling 11 percent of its interest in the Tamar field in accordance with Israel’s framework, expects to sell the remaining 7-8 percent in the next 36 months.

The stake sales, as well as the natural gas framework, will pave the way for Delek and Noble Energy to speed up the development of the huge Leviathan gas field. Noble Energy and Delek intend to produce natural gas from the Leviathan field, with the hopes of bringing production online by 2019. Development has suffered several years of delays due to regulatory uncertainty. The Leviathan promises to provide gas to Israel, but also gas for export to Jordan and Egypt.

By Tsvetana Paraskova for Oilprice.com

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