Energean CEO: We're not greedy

Mathios Rigas Photo: PR

Mathios Rigas tells "Globes" that low expenses allow the Karish and Tanin operator to sell gas at $4 per Btu, while IEC pays $6 for Tamar gas.

"We can offer competitive prices for two reasons: we aren't greedy, and we're a flexible company with unusually low operating expenses, even in comparison with giant international companies. In addition, the timing of our discoveries was excellent. I believe that had we developed our reservoirs five years ago, we would have reached much higher prices," Mathios Rigas, CEO of Greek company Energean, which is developing the Karish and Tanin natural gas reservoirs, told "Globes" today. Energean also recently won five more marine blocs in a Ministry of National Infrastructure, Energy, and Water Resources tender for oil and gas exploration in Israel.

Energean, which acquired the Karish and Tanin reservoirs after the natural gas plan was approved, is competing with the Leviathan and Tamar reservoirs controlled by Delek Group Ltd. (TASE: DLEKG) and Nobel Energy. The average price in the deals signed in recent months is around $4 per Btu (British thermal unit), 33% less than the $6 per Btu that Israel Electric Corporation (IEC) (TASE: ELEC.B22) is paying for gas from Tamar. This matter is currently being heard in a class action suit filed against the Tamar partners for their allegedly exorbitant price.

Energean, which has 35 years of experience in the business, is one of the only two foreign companies exploring for oil and gas in Israel. The company today officially announced its intention of holding an offering on the main London Stock Exchange aimed at raising $500 million in order to develop its Karish and Tanin reservoirs.

This amount is in addition to $1.25 billion that will be financed by a consortium of local and international investment institutions and banks, led by Bank Hapoalim (TASE: POLI), which will invest $375 million. The agreement with the consortium was signed last Thursday. Other financial concerns in the consortium are Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), Psagot Investment House Ltd., Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), and Mizrahi Tefahot Bank (TASE:MZTF). It is believed that the huge financing deal will get underway by the end of the current quarter, at which time Energean will announce that it has closed the financing and made a financial decision to develop the reservoirs.

"Globes": Why not an offering in Israel?

Rigas: "Energean has been active for over 30 years - not just in Israel, but also in Greece, from where all its production goes to UK company BP. We have 25 drilling programs in Greece, and we also have blocs in Montenegro. As a result, the London Stock Exchange is the most suitable for us right now. It's true that activity in Israel is Energean's largest-scale activity, and that's why local financial institutions are participating in the financing of our project, and we are seriously considering registering for secondary trading on the TASE in the future."

What is your future plan for the new blocs you recently won?

"First of all, we're counting on an increase in gas consumption in Israel following the announcement by the Israeli government that the economy will be converted from coal to gas. Secondly, we believe that a way will be developed for exporting gas from Israel. This is one of the most important things for the Israeli economy, whether exports go to Europe, for which construction on a pipeline will begin next year, or exports to Greece, Egypt, or other countries."

According to Energean's plan, the supply of gas from Karish and Tanin will begin in early 2021. Development of the Karish reservoir will including laying a pipeline to transport the gas from the reservoir to Israel's national gas transportation system. Development of the Tanin reservoir, planned for a later stage, will including the drilling of six wells that will be connected to a floating production storage and offloading (FPSO) unit. The company recently announced that it had enough signed contracts to begin the financial closure process. Energean has signed contracts to date to supply over 4 BCM.

Your floating platform is currently being expanded from 4 BCM to 8 BCM. Will you also offer to let your competitors use it, especially in view of the recent discoveries in the Mediterranean Sea?

"We had to start expanding the platform after signing all the agreement with local customers for over 4 BCM of natural gas a year. In addition, we won the Ministry of National Infrastructure, Energy, and Water Resources' international tender for five more blocs. As far as our competitors are concerned, they can also use our platform. This is an accepted thing worldwide. Cooperation can make a project more worthwhile for everyone."

Published by Globes [online], Israel Business News - www.globes-online.com - on February 19, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Mathios Rigas Photo: PR
Mathios Rigas Photo: PR
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