Tamar After Phase One: Why More Capacity Still Does Not Mean More Cash

The main article already made the broad point: Tamar's expansion improves Isramco's operating setup, but it does not settle the question of who can actually take, transport and pay for the additional volume. This follow-up isolates only the gap between completion of phase one and the point at which that extra volume turns into monetized sales. Those are two different clocks.

The evidence is straightforward. Phase one of the expansion project was completed on February 9, 2026. The Kesem contract entered into force on February 22, 2026. The additional export route to Egypt is also moving forward. But as of approval of the annual report, the AOT compressor upgrade was still not complete, the export-system upgrade outside Israel was only guided for the second half of 2026, Nitzana was only guided for the second half of 2028, and Kesem's commercial supply is only expected in 2029. So anyone translating the completion notice into an immediate cash inflection is skipping three layers of friction: compression, transport and commercial maturity.

It is also important to say what this argument is not saying. Tamar is already exporting and collecting cash. In 2025, the Tamar partners supplied about 3.07 BCM to BOE. The debate is not whether the market exists. The debate is when and how the next chunk of volume can move from physical capability into paid-for throughput.

The Monetization Chain, Without Shortcuts

That chart is the core distinction. Isramco already benefits from existing exports, but the volume that could really change the story still sits either inside the infrastructure bottleneck or inside the contractual timetable.

Even After Completion, Tamar Is Still Not At 1.6

This is the easiest mistake to make. After completion of the first stage of the expansion project, Tamar's maximum daily production capacity stood at about 1.15 BCF per day as of the report date. Only completion of the AOT compressor upgrade, together with phase one, is supposed to bring the project up to as much as 1.6 BCF per day.

The immediate report dated February 10, 2026 confirmed exactly that: phase one had been completed one day earlier, on February 9, 2026, but the compressor upgrade was still unfinished, with only an operator estimate that it would be completed in the coming weeks. That is not a footnote. Anyone locking in 1.6 BCF per day as if it were already operating is moving the number ahead of the infrastructure.

The economic implication is direct. More reservoir-side capacity is a necessary condition, but not a sufficient one. Until the compressors are done, even the most bullish physical case is still incomplete.

BOE Is Already Buying, But The Increment Still Depends On The Pipe

The BOE contract proves that there is a buyer for more volume. Under the February 2024 amendment to the export agreement, Tamar supplies about 2 BCM per year, and from the start of the additional-quantities period another roughly 4 BCM per year is supposed to be added. The problem is that the contract itself admits that this jump is not automatic. The start date for the additional quantities was pushed into the first quarter of 2026, and the annual report explicitly says that an inability to transfer all or part of those extra quantities because of a lack of transport capacity or lack of transport-system availability does not count as a breach.

So there is a real commercial contract here, but also an explicit admission that the pipe can move slower than the contract. That is exactly the gap between physical capability and monetization.

EMG itself is not an unrestricted corridor for Tamar either. Under the capacity-allocation agreement, the priority order is clear: up to 350 MMSCF per day is allocated first to Leviathan, Tamar gets the second layer up to 200 MMSCF per day, and any capacity beyond that second layer goes back to Leviathan. That is a point the market can easily miss, because it is tempting to read "more exports to Egypt" as if every extra molecule automatically belongs to Tamar. It does not.

There is also a pricing nuance, not only a volume nuance. The BOE agreement allows Nitzana to be added as a delivery point only once the relevant infrastructure is completed, and in that case the gas price is adjusted for the additional transportation costs borne by the buyer. In other words, even when the new route opens, the economics of the sale do not simply remain unchanged.

Nitzana Opens An Option, But It Charges Capital First

At first glance, Nitzana is easy to read as the solution. In practice, it is more of a later option than a 2026 answer. The partnership estimated completion of the export-system upgrade outside Israel in the second half of 2026, but completion of Nitzana itself was only estimated for the second half of 2028. That already pushes an important part of the monetization chain to the back end of the decade.

The other side of the story is the capital bill. The Tamar partners' share of Nitzana funding is estimated at about $286 million, and Isramco's share at about $82 million. By December 31, 2025, about $161 million had already been invested in the project, including roughly $46 million on Isramco's account. On top of that, Chevron estimated that actual construction costs for the compressor station would exceed the fixed EPC amount. Those excess costs were estimated at $64 million at the project level, leaving Tamar's share at about $32 million and Isramco's share at about $9.2 million.

That is the heart of the issue: even when a future pipeline is supposed to unlock another monetization route, Isramco pays first and sees the money later.

And the Natgaz agreement does not turn all future volume into Firm capacity. It does preserve a firm daily base capacity, but the volumes above that base are defined as interruptible and remain subject to whatever capacity is available in the system. More than that, the minimum 1.8 BCM per year of additional quantities is defined for all exporters that sign transport agreements tied to Nitzana, not for Tamar alone. Put differently, even on the route that is supposed to open the next bottleneck, the layer above the base is not guaranteed in the way the market sometimes prefers to read it.

Kesem Proves Demand, But It Is Demand For The End Of The Decade

This is the answer to the question of whether there is a real buyer for future gas. There is. On April 10, 2025, the Tamar partners signed a natural-gas sales agreement with Kesem Energy for a combined-cycle power station that is expected to be built near the Kesem interchange. On February 22, 2026, the last condition precedent was met, so the agreement is already in force.

But the market can easily skip the second half of that sentence. According to the annual-report note, the Tamar partners committed to supply Kesem on a firm basis with up to 0.8 BCM per year from the start of commercial supply, which is expected in 2029. The agreement then runs for 5 years or until January 1, 2035, whichever is later, and includes a Take or Pay commitment by the buyer. So Kesem does support the argument that future demand exists, but it does not solve the monetization gap for 2026 through 2028. It simply sits further out on the timeline.

In thesis terms, that matters a great deal. Kesem is proof of demand, not a near-term cash bridge.

Bottom Line

Completion of phase one at Tamar is a real event. The Kesem agreement is also a real event. And the broader export build-out is also real. But the link between them is still incomplete. Right now, the field has moved faster than the transport path, and the transport path has moved faster than the timetable for new cash receipts.

So the right read on Isramco after phase one is not "more capacity equals more cash," but something more precise: more capacity is already being built, more monetization is already being contracted, but the additional cash only arrives if several separate checkpoints close in sequence. First the compressors, then the export-system upgrade outside Israel, then proof that the extra BOE volumes are actually flowing, then Nitzana, and only after that Kesem.

The current thesis rests on a timing gap, not on an absence of demand. That is a large distinction. If the compressor upgrade is completed, if the export-system upgrade outside Israel stays on schedule, and if Isramco starts showing that extra volume is actually turning into real sales, then that gap can close relatively fast. But until those checkpoints are crossed, anyone reading physical completion as if it were already a cash completion is simply getting ahead of the story.