Greek energy company Energean Oil & Gas plc (LSE: ENOG; TASE: ENOG), owner of the rights to Israel's offshore Karish and Tanin natural gas fields, has signed a letter of understanding (LOI) with Greek gas corporation DEPA for the sale of up to 2 BCM of gas annually. The plan is to export Israeli gas to Greece through the projected undersea natural gas pipeline to Europe, construction of which will cost an estimated $9 billion.
Energean signed the LOI ahead of the signing of the EastMed pipeline agreement by the energy ministers of Cyprus, Greece, and Israel. Gas will be produced at Karish and Tanin using a floating production storage and offloading (FPSO) unit located 90 kilometers from the coast.
Energean said, "This is the first commercial agreement to promote activity using the East Med Pipeline. Additional details, including the terms, delivery points, gas composition, price and others, will be discussed as part of the detailed agreement between the companies."
DEPA CEO Konstantinos Xifaras said, "The agreement signed today is a decisive step towards commercial implementation of the project. DEPA is undertaking to buy 2 BCM, which is equivalent to 20% of East Med Pipeline's initial capacity."
Energean CEO Mathios Rigas said, "The agreement with DEPA is an important development of East Med Pipeline, an important project for the commercial sector and for suppliers and consumers of natural gas in the region. It is the first commercial agreement for the project, which will make a substantial contribution to supplying energy to consumers in the Eastern Mediterranean Basin region of the Mediterranean Sea and Europe."
Energean entered the Israeli market in 2016 by buying development licenses for the Karish and Tanin reservoirs. In March 2018, the company made a final investment decision to develop the reservoirs using FPSOs stationed 90 kilometers from the shore. Gas production is projected to begin in 2021. Energean has signed agreements to sell 5 BCM of gas to the Israeli market, while future agreements are likely to focus on both the local market and key export markets in the region.
Energean also holds nine more exploration licenses in Israeli economic waters.
Last July, Energean acquired the oil and gas activity of Italian company Edison Energy & Production (E&P) for $750 million, plus an additional contingent payment of $100 million. Once the deal is completed, Energean will hold projects in additional countries in the Mediterranean Sea, 80% of which involve natural gas.
Published by Globes, Israel business news - en.globes.co.il - on January 2, 2020
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020