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01/09/2012

Offshore Gas Field Development Finance TAMAR Offshore Gas Field Development Finance

SG CIB acted as MLA, Modelling Bank and Hedging Bank for a USD 900m senior secured term loan facility designed to finance development costs for the Tamar field, a giant, world class gas field located offshore Israel. The field is expected to come on stream in April 2013.

Tamar is the first development financing in the promising Mediterranean oil & gas region.
The sponsors, Delek Drilling, Avner Oil and Dor Gas, hold 35.25%. Delek Drilling and Avner Oil are part of the Delek Group - a leading Israeli conglomerate with interest in infrastructure, financial services and energy. Noble Group, a key client for GLFI/NAT, is the operator and holds 36% interest in Tamar gas field.

The development concept entails five subsea production wells tied-back to a centralized gathering point with gas transported via a 149 km dual pipeline to a new offshore receiving and processing platform. The gas will be sold in the domestic market and delivered to customers through existing pipeline infrastructure via the Israeli Electrical Company and other domestic offtakers.

Tamar field was the largest global gas find of 2009 and its exploration is of huge strategic importance for Israel. It will enable the country to become self-sufficient in terms of gas supplies for approximately 20 years. The site is under rapid development and is expected to start supplying natural gas as early as 2013. Over the next 10 years, the Tamar field will supply between 50% and 80% of Israel’s natural gas consumption needs.
The transaction was closed and slightly oversubscribed despite the volatile market context and despite the challenge of providing development financing for non-IG sponsors based on gas for a domestic market only.

This transaction will set a precedent and should lead to other similar project financing in the region.

This transaction involves an emerging oil & gas leader, Delek group, which has significant interest in another giant gas field, Leviathan, located offshore Israel. Leviathan gas is expected to be exported through LNG plant.