Sources inform ''Globes'' that BG Group (NYSE: BRG; LSE: BG) (formerly British Gas) has demanded clarifications from the Ministry of Finance and Ministry of National Infrastructure about the state's willingness to provide guarantees for the purchase of natural gas from its offshore well near Gaza. The UK company made the request during a meeting last week with Ministry of Finance director general Yarom Ariav and Ministry of National Infrastructures director Hezi Kugler. BG Group is apparently seeking a commitment from the state to purchase the gas reserve in full, rather than just part of it.
BG Group made it clear at the meeting that the prices discussed in the previous negotiations ($4.50-4.60 per BTU) no longer applied, in light of the increase in energy prices worldwide.
Two weeks ago it was disclosed that BG had officially announced that it was resuming talks with the Israeli government on the sale of its natural gas reserve in Gaza. The company announced the move in response to a request from the Ministry of Finance and the Ministry of National Infrastructure to resume the talks, which were called off earlier this year.
The government is now considering turning over the handling of the negotiations to Israel Electric Corporation (IEC) (TASE: ELEC.B22), which will be required to increase its purchases of natural gas from 2015 onwards. The Ministry of Finance supports the idea of IEC purchasing the gas from BG Group and is promoting this option. The Ministry of National Infrastructures, on the other hand, would like to see a new government company undertake to purchase the gas instead.
Six months ago, BG Group ended the talks with the government and closed its office in Israel, following the delays in negotiations and disagreements on price prices.
Published by Globes [online], Israel business news - www.globes-online.com - on August 6, 2008
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