The board of directors of Greek energy company Energean today approved a final investment decision (FID) for a $1.6 billion investment in development of the company's Karish and Tanin natural gas reservoirs, the company today notified the London Stock Exchange (LSE).
The supply of gas from the offshore Israeli fields is scheduled to begin in early 2021. Development of Karish will include placing a gas pipeline from the reservoir through Israel's natural gas transportation system. Development of Tanin, which is scheduled later, will include the drilling of a six wells that will be connected to a floating production storage and offloading (FPSO) platform.
Energean last week raised $460 million in an IPO on the LSE. The company previously signed a $1.275 billion financing deal with a consortium of four Israeli and international banks: Bank Hapoalim (TASE: POLI), Morgan Stanley, Societe Generale, and Natixis. The senior partner in the consortium, Bank Hapoalim, will invest $375 million, and the three foreign banks will invest $300 million each.
Israeli investment institutions also took part in Energean's IPO in London. The leading purchaser from Israel was Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), which spent $100 million on the offering, and is accordingly likely to become a party at interest in Energean with a 10% stake. Other investment institutions taking part included Psagot Investment House Ltd., Meitav Dash Investments Ltd. (TASE:MTDS), and Sphera Fund.
Competition with Leviathan and Tamar
Energean recently announced that it had enough signed contracts to start the financial closure process and announce an FID, which it in fact did today. The company has signed contracts with private electricity producers to supply 61 BCM of gas over a period of 16 years, at an annual rate of approximately 4.2 BCM per year (on an ACQ basis).
Energean, which acquired the Karish and Tanin reservoirs following approval of Israel's gas plan, is competing with the Leviathan and Tamar gas reservoirs, controlled by Delek Group Ltd. (TASE: DLEKG) and Noble Energy. The average price in the deals signed in recent months is about $4 per BTU, 20% lower than the agreement signed with Leviathan and 30% lower than the price being paid by Israel Electric Corporation (IEC) (TASE: ELEC.B22) for gas from Tamar.
Energean CEO Mathios Rigas said, "We promised our investors that we would make an FID after our IPO, and I am glad to announce that we are fulfilling our promise."
Published by Globes [online], Israel Business News - www.globes-online.com - on March 22, 2018
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