The Israel Electric Corporation (IEC), the country’s state-owned utility, has initiated arbitration proceedings in London against the partners at the 13.7tcf Tamar gas field, led by operator US major Chevron, following the collapse of negotiations to update their long-term gas supply contract. The dispute centers on the price IEC pays for Tamar gas, which in turn has major implications for Israel’s electricity costs.
The original gas supply agreement between IEC and Tamar was signed in 2012, a year before the field started-up, and included a price-update mechanism. Under this mechanism, once the contract reached its update stage in January 2025, the base gas price—about $4.5/mn Btu—could be adjusted up or down by up to 10%, depending on market conditions. The benchmark for negotiations was supposed to be prevailing gas prices in Israel. The 22.3tcf Leviathan field, like Tamar operated by Chevron, is currently the most expensive gas for domestic customers, with users paying $5.13/mn Btu last quarter. Tamar is in second place at $4.38/mn Btu according to MEES calculations based on company filings. (CONTINUED - 844 WORDS)
