Connection Procedures

Israel Natural Gas Lines is responsible for connecting a new customer to the national natural gas transmission network. The process requires company authorization, in which the following aspects are considered:

  • Customer Profile – Israel Natural Gas Lines gathers initial information about the customer’s profile and needs, to make sure these meet the conditions set in the licensing agreement.
  • Assessment – Assessment of the project’s feasibility in terms of engineering requirements and the profitability of investing in network expansion.
  • Company Approval – A detailed report of the profiling and feasibility findings is submitted to the company’s investment committee for approval. The investment committee is authorized to give final approval prior to the expansion of the network and the connection to new clients or sites.

 

The Authorization Process:

Phase 1

  • The potential customer submits a request to connect to the national transmission network.
  • The request is assessed to ensure that it corresponds to the terms in the company’s licensing agreement and to ascertain a match between available services and customer’s needs and expectations.
  • The potential customer submits a Service Request Form.
  • A “new customer” file is opened, and comprehensive information about the customer is gathered, including
  • Technical information about the customer’s plant or facility and its purpose (switch fuel types, establish a new energy source or produce electricity);
  • Customer’s geographic location in relation to the existing network
  • Possible PRMS site locations, either on the network or on the customer’s property;
  • Customer’s existing agreement with a natural gas supplier and the capacities entailed;
  • The customer’s current requirements and plans for future capacity needs;
  • Available sources for project financing;
  • Financial securities and collateral guaranteed by the customer.

 

Phase 2

Planning and engineering criteria:

  • Project feasibility study, and time-frame and schedule for approval of plans;
  • Statutory restrictions on land use, the permits and licenses required and corresponding time-frame;
  • Availability of items for purchase and proposed delivery schedule;
  • Engineering Department’s recommendation.

Construction criteria:

  • Contractor availability;
  • Availability of equipment

Financial criteria:

  • Financing sources, availability and conditions.

Commercial criteria:

  • Project profitability, proposed budget, project’s time-frame, financial securities and collateral guaranteed by the customer.

 

Should Israel Natural Gas Lines agree to cover construction expenses prior to obtaining a transmission agreement with the potential customer, the customer will be required to sign an Obligation and Compensation Agreement, whereby the customer agrees to purchase transmission services, connect to the network and use a predetermined quantity of gas. Conversely, according to the Obligation and Compensation Agreement, should the potential customer opt not to purchase transmission services, the customer will be obligated to compensate the company for all expenses accrued.

Phase 3

In this phase, negotiations are held to determine the precise conditions of the Transmission Agreement. It is based on a company template that has been approved by the natural gas authority, to which the particular client details are added. The purpose of this agreement is to establish the commercial relations between the parties, the supply and transmission conditions (as well as the blueprint for the Agreement to Connect to the Network).

If at this phase the relevant document is the Obligation and Compensation Agreement (previously mentioned), then the negotiations will pertain to the conditions stipulated therein.

Phase 4

Based on a detailed report that includes a profile of the customer’s company, findings of the assessment and the feasibility tests, and relevant recommendations, the company’s investment committee considers the project for approval. The investment committee operates according to internal regulations, taking into account the predicted progress of the SAIL project and the company’s long-term plans. If the project is authorized by the committee and final approval is granted, the project enters into the operational phase.

Diagram of the Authorization Process: