Israel gas stocks up, Ampal-American Israel flat on pipeline attack

By Tova Cohen

TEL AVIV, Feb 6 (Reuters) - Shares in Israeli gas exploration companies rose sharply on Sunday following an explosion in Egypt's North Sinai that halted the flow of natural gas to Israel.

Ampal-American Israel Corp, a partner in the East Mediterranean Gas Co (EMG) that supplies Egyptian gas to Israel, initially fell over 5 percent before recovering.

Egyptian state television said on Saturday saboteurs blew up a pipeline that runs through Egypt's North Sinai, disrupting flows to Israel and Jordan, after Islamists called on militants to exploit the unrest that has rocked the government.

A security source in North Sinai said 'foreign elements' targeted the branch of the pipe that supplies Jordan.

Amapl said EMG's pipeline from Egypt to Israel is intact and was not damaged by an explosion at a gas metering station and that gas supply would resume within a week.

Ampal, a holding company, has a 12.5 percent interest in EMG. Its shares were down 0.1 percent following its statement, having been down over 5 percent earlier.

'The supply of gas to EMG, and therefore to EMG's Israeli clients, has been interrupted by a fire in a facility not related to EMG,' Ampal said in a statement.

Ampal did not confirm or deny there was an attack.



ISRAEL GAS GAINS

Analysts said Israeli exploration companies stood to benefit from any disruption in the flow of Egyptian gas.

Shares in Israel conglomerate Delek Group rose 5.2 percent while its subsidiaries Delek Drilling and Avner Oil gained 4.1 and 4.3 percent, respectively.

Delek is a partner with Texas-based Noble Energy in the Yam Thetis group that produces natural gas off of Israel's southern Mediterranean coast.

They are also partners in the consortium that discovered huge amounts of natural gas further north, in the Tamar and Leviathan prospects. Production at Tamar is expected to begin in 2013, when the Yam Thethis field runs dry.

Shares in Isramco Negev, another partner in the Tamar prospect, jumped 4.6 percent.

'Above all, the events in Egypt emphasise the importance of having several suppliers of gas to the Israel energy market,' Adi Stern, head of energy investments at the Tamir Fishman brokerage, said, noting EMG supplies 45 percent of the gas needs of Israel's electric utility. Yam Thetis supplies the rest.

Israel's National Infrastructure Ministry said it had alternative energy sources available and anticipated no disruption to domestic electricity production.

The Yam Thetis field was prepared to help compensate for the loss of Egyptian gas, the ministry said.

Stern said the Yam Thetis partners were the immediate beneficiaries of the explosion as they would sell gas at spot prices, which are substantially higher than the prices in their contract, as long as the flow of Egyptian gas was disrupted.

'It is clear to everyone that the most important mission is to develop the Tamar field,' he said. 'At this stage the power struggle between the government and the partners will step up a notch ... and it is likely the partners will benefit.'

Israel's cabinet last month approved a proposal to raise the state's share in profits from recently discovered natural gas reservoirs. Energy companies have vowed to fight the measure, which still needs parliamentary approval.

(Editing by David Holmes) Keywords: ISRAEL GAS/STOCKS ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.