The Tethys Sea group is to invest $235 million between the years 2001-2003 in the production of gas from a reservoir near Ashkelon, in southern Israel. The investment is to commence in the coming days, announced the boards of Delek Drilling and Avner, the Tethys Sea group partners.

In 2001, Tethys Sea will invest $51 million in the project. It plans to pipe the natural gas to Israel's shore by 2003.

Delek and Avner own 53% of the rights in Tethys Sea, and the American drilling company Samedan owns the remaining 47%.

The problem is that so far, the group hasn't signed a contract to supply the gas to the Israel Electric Corporation, which in theory is its main customer.

"We believe in the project and rather than finding reasons to delay it, we have decided to create the right conditions to move ahead without having a contract with the IEC. I believe that our move will help expedite the IEC's decision," said Avner Chairman and joint-CEO Gideon Tadmor.

The Tethys Sea group partners will also probably help fund the project. Tadmor said that the group is currently holding talks with various bodies, in order to raise the required capital.

The IEC board recently decided to enter negotiations with the Tethys Sea group in an effort to acquire 1.7 billion square meters of natural gas annually. This would be used to supply gas to the IEC power stations for the next 10 to 15 years. The group said that the talks are ongoing.