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Press Release

Tuesday, December 20, 2005

Agreements Finalize $250 Million in OPIC Insurance for Natural Gas Pipeline in Israel

WASHINGTON, D.C. – A series of agreements concluded today among the Overseas Private Investment Corporation (OPIC), Citigroup and the Israel Electric Corporation (IEC) will enable OPIC to provide $250 million in political risk insurance for the construction of a natural gas pipeline that will reduce Israel’s dependence on imported fossil fuels and generate $200 million in annual savings for electricity generation.

OPIC’s insurance will cover a loan for the construction of a 65-mile pipeline that will transport natural gas produced offshore, from Ashdod in southern Israel to Hagit 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. OPIC is providing the insurance to the IEC Gas Pipeline Financing Trust; Citigroup arranged financing for the project.

OPIC President and CEO Robert Mosbacher, Jr. and IEC Chairman Shlomo Rothman today signed a foreign enterprise support agreement for the project, which, along with an OPIC insurance contract concluded last month and a loan agreement also signed today, enables the financing for the pipeline to proceed.

“This natural gas pipeline is critical to Israel for both economic and environmental reasons,” Mosbacher said. “It will exploit offshore natural gas reserves to significantly reduce Israel’s dependence on imports, in the process using an energy source – natural gas – that is cheaper and less polluting than oil or coal.”

“Moreover, OPIC’s participation facilitated a flexible financing structure, including a 20-year loan term, that will support Israel’s efforts to identify private-public sector partnerships that can address its energy needs,” Mosbacher added.

Rothman welcomed all parties that contributed to the successful finalization of the loan facility, while emphasizing its importance to IEC, its gas suppliers –Yam Tethys, an American /Israeli group, and EMG, an Egyptian/Israeli group – as well as to the Israeli economy. He expressed his hope that the loan agreement would pave the way for future economic cooperation with IEC in infrastructure projects for the benefit of economic growth in the region in general and in the State of Israel in particular.

Eli Hassine, managing director and Citigroup's global head of export & agency finance, said, "Citigroup is proud of our longstanding partnership with OPIC. This transaction provided a financing solution for IEC, while continuing to strengthen our relationship with OPIC, demonstrating Citigroup's global reach and coordination between our Tel Aviv, New York and Washington offices."


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.