Phoenicia threatens to close Israeli plants

Phoenicia president Oded Tyrah recently contacted Pazgas CEO Pinchas Biderman, following Pazgas’s announcement that it would halt its production of olefin-free gas, starting in October 2005. As reported exclusively in "Globes", Oil Refineries is expected to cut its gas production from October. Oil Refineries is obligated to reduce the olefin content of its gas to 30%, which will reduce its production capacity, and apparently lead the company to completely halt its production of olefin-free gas. This is expected to raise industrial gas prices by at least 1.5%. Phoenicia has used olefin-free gas in its manufacturing process for years.

Tyrah said that without an environment that supports suppliers’ obligation to their customers, it was doubtful whether enterprises, including Phoenicia, would have any reason to continue their activity in Israel.

Tyrah told "Globes" that the olefin-free gas produced by Oil Refineries was critical for Phoenicia’s activity, because Phoenicia’s plant used the gas to produce nitrogen and hydrogen, which played a key role in the manufacturing process.

Phoenicia reportedly is also planning to invest $35 million in a heater for melting glass in its plant. Disruption of olefin-free gas supplies threatens this investment.

Phoenicia is demanding that Pazgas, an exclusive supplier, with which Phoenicia has had commercial relations for decades, find ways to continue regular supply of this energy resource at the current prices for at least the next four years, until a decision is made about the future of Phoenicia’s plant in Israel.