The shares of EMG partner Ampal-American jumped 16% in morning trading on the announcement

Egypt’s East Mediterranean Gas Co. (EMG) is expanding its collaboration with private power plants contractor Edeltech Holding Ltd., owned by Yosef Edelsburg and Turkey’s Zorlu Industrial and Powerplants Construction Co. Inc. Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL), which owns 12.5% of EMG, today announced that EMG has signed three 18-year gas sale agreements, with three Edeltech subsidiaries, worth $1.3 billion altogether. The agreements have been signed while EMG is in talks on the reopening of its gas supply contract with Israel Electric Corporation (IEC) (TASE: ELEC.B22).
Edeltech is planning to build the private power plants for IDB Holding Corp. Ltd. (TASE:IDBH) unit Makhteshim Agan Industries Ltd. (TASE: MAIN) and Solbar Industries Ltd. (TASE: SLBR) at the sites of their industrial plants.

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The contracts follow EMG’s gas supply agreements with IEC, private power producer Dorad Energy Ltd. (in which both Edeltech and Zorlu are partners), and IDB unit Israel Cement Enterprises Ltd. for its plant in Ramle.

The three contracts are with Solad Energy Ltd., for its 100-megawatt and 90 tons of steam per hour cogeneration plant at the Solbar factory in Ashdod; Ashdod Energy Ltd., for its 55-megawatt and 40 tons of steam per hour the cogeneration plant at Makhteshim’s Agan Chemicals factory in Ashdod; and with Ramat Negev Energy Ltd. , for its 115-megawatt and 110 tons of steam per hour cogeneration plant at the Makhteshim Chemicals Works factory in Ramat Hovav.

The contracts come 18 months after EMG and Edeltech agreed in principle on the gas supply agreements as part of the contract with Dorad. The final contracts were delayed when Egypt sought to raise the price of natural gas supplied to Israeli customers.

Two months ago, EMG signed a $2.1-2.5 billion gas supply agreement with Dorad for the supply of 12.5 billion cubic meters of gas over 17 years. The price of deal reflected a 10-30% higher price for natural gas. Sources believe that the new contracts with Edeltech reflect a similar higher price.

Edeltech is involved in the construction of cogeneration power plants at a combined investment of NIS 1.5 billion. The power plants will have a combined capacity of 400 megawatts, and will need 600-800 billion cubic meters of gas a year for operations.

Ampal chairman, president and CEO Joseph Maiman said, “The signing of the three agreements by EMG, as well as EMG’s active and ongoing negotiations with other potential customers, including electricity producers and industrial companies, buttresses our view that EMG’s gas supply is stable and reliable and, we believe, demonstrates that the energy market in Israel, as well as the financing sources for these projects, believe in the reliability and competitiveness of EMG’s gas. EMG is working with more potential customers who desire to replace costly, polluting fuels with cleaner and cheaper natural gas, and they are turning to EMG as a solution.”

Edeltech CEO Udi Wild said, “The company is proud to lead the camp of clean, cheap, and independent energy producers by leading companies. We intend to expand our activity in the Israeli energy market.

Egyptian businessman Hussain Salem owns 28% of EMG, EGAS owns 10%, Thai energy giant PTT Public Co. Ltd. owns 25%, Joseph Maiman owns 20% through Ampal-American and his private company Merhav MNF Ltd., and Israeli institutional investors own 4.4%. Ampal’s share closed at $2.16 on Nasdaq yesterday, giving a market cap of $121 million. The share rose 16.1% in morning trading on the TASE today to NIS 9.61.

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