NewMed Energy (TASE: NWMD), the Delek unit that holds a 45.34% stake in the Leviathan gas field, has notified the Tel Aviv Stock Exchange (TASE) that the fields operator Chevron, which has a 39.66% stake, has decided to suspend work on laying a marine pipeline as part of the third pipeline project, because of the escalation in the north, until April 2025, "depending on the schedules in the order backlog of the contractor and the security situation that will prevail in the region."
This means that completion of the project will be delayed by at least six months. NewMed stressed, "There is no material cumulative effect on the total value of the partnership's discounted cash flow from the Leviathan project, however it is expected to have a material negative cumulative effect on the expected cash flow in 2025." The third pipeline project was begun by the Leviathan partners in July 2023. The partnership also includes Ratio Energies (TASE: RATI) (15%).
The underwater pipeline is being laid to 120 kilometers west of Haifa, and is designed to convey gas to the production rig, which is about 10 kilometers offshore from Dor Beach. The project aims to increase Israel's daily supply of natural gas by 0.2 BCF. According to the original plan, the first gas was due to flow through the pipeline in the second half of 2025, but now, works have been halted until close to the date when the project had been due to come onstream.
The meaning: less gas for export
In 2023, Israeli natural gas consumption rose to 24.7 BCM: 13.1 BCM for the domestic economy and 11.6 BCM for export. There was a 3.5% increase in domestic consumption in 2023 and a 21% increase in exports. The meaning of the delay in the third pipeline project is that there will be less gas for export, although no shortage for domestic consumption. Last year 75% of gas was exported to Egypt and the remainder to Jordan.
In 2023 the Leviathan field produced 11.1 BCM in natural gas, the Tamar field 9.1 BCM and Karish 4.6 BCM. 78% of the gas exported last year was produced by the Leviathan field, with the rest coming from the Tamar field while the Karish field only produced for the domestic economy. 17% of the gas consumed in the domestic economy comes from Leviathan, 34% from Karish and 49% from Tamar.
Due to the war, NewMed said, "Following the latest security developments and depending, among other things, on operational and technical considerations of the network, the operator from time to time, in accordance with the instructions for operating the rig and its safety procedures, initiates interruptions of production from the Leviathan field for certain periods of time." The company added that currently the decline in production volume due to production interruptions, "Was not of a substantial amount in relation to the annual production volume."
Published by Globes, Israel business news - en.globes.co.il - on October 7, 2024.
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