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Press Release

Monday, November 22, 2004

OPIC Board Approves $250 Million in Insurance for Natural Gas Pipeline in Israel

WASHINGTON, D.C. – The board of directors of the Overseas Private Investment Corporation (OPIC) approved $250 million in political risk insurance for the construction of a 65-mile pipeline that will serve as the centerpiece of Israel’s natural gas system, reducing that country’s dependence on imported fossil fuels and generating $200 million in annual savings for electricity generation.

OPIC’s insurance will cover a loan for the construction of a pipeline that will be used to transport natural gas produced offshore, from Ashdod in southern Israel to Dor in the north, for downstream power projects in the country. Once completed, the pipeline will be owned by the Israeli government and operated by Israel Natural Gas Lines.

The Israel Electric Corporation, the State of Israel, OPIC and Citigroup are currently negotiating the loan documentation and are expecting to close the transaction by year-end. The Israel Electric Corporation estimates that annual savings from the use of natural gas electricity generation will amount to about $200 million a year, the majority of which will be passed on to end users through tariff reductions.

“This natural gas pipeline is critical to Israel for economic and environmental reasons,” said OPIC President and CEO Dr. Peter Watson. “Until recently, Israel had relied almost exclusively on imports to meet its energy needs. This project will exploit recently-discovered offshore natural gas reserves to significantly reduce Israel’s dependence, in the process using an energy source – natural gas – that is cheaper and less polluting than oil or coal.”

According to Citigroup’s country manager for Israel, Gus Felix, “The use of OPIC insurance in support of this loan results in attractive all in pricing and, more importantly, taps an entirely new source of funding for Israeli infrastructure projects.”

According to Dr. Yaron Zelekha, Accountant General of the State of Israel, “OPIC’s insurance coverage and the proposed financing by Citigroup provides an additional attractive alternative for the financing of such projects in Israel.”


OPIC is the U.S. Government’s development finance institution.  It mobilizes private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy.  Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad.  OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.

 

Established as an agency of the U.S. Government in 1971, OPIC operates on a self-sustaining basis at no net cost to American taxpayers. OPIC services are available for new and expanding business enterprises in more than 150 countries worldwide. To date, OPIC has supported nearly $200 billion of investment in over 4,000 projects, generated $74 billion in U.S. exports and supported more than 275,000 American jobs.