Energean: Coronavirus could delay gas development

Energean's FPSO Photo: TFMC Energean

The FPSO for the Tanin and Karish offshore natural gas fields is under construction in China.

The coronavirus outbreak in China is liable to delay natural gas delivery by Greek company Energean Oil & Gas plc (LSE: ENOG; TASE: ENOG) to customers in Israel. Energean, which is developing the small offshore Karish and Tanin gas fields, announced today that it had been notified by TechnipFMC, a subcontractor for the Karish and Tanin development project that it "reserves the right to extend the agreement for completion of the project due to events beyond our control."

TechnipFMC is concerned that the quarantine in parts of China because of the virus will delay completion of the floating production storage and offloading unit (FPSO) designed to produce gas from Karish and Tanin and stream it to the shore. The FPSO, now being built in China at a cost of $2 billion, is scheduled to reach Israel before 2021, and to anchor above the fields, 100 kilometers off the shore.

The company nevertheless reported that no delay in the timetable was likely, adding that as of now, 550 people were working in Chinese shipyards. TechnipFMC's announcement follows a wave of announcements by Chinese companies that they were suspending activities because of the coronavirus outbreak, citing force majeure.

Energean has contracted to supply 5 BCM of gas, nearly half of Israel's annual gas consumption, starting in 2021. Energean's customers include Israel Corporation (whose subsidiaries include Oil Refineries, Israel Chemicals, and OPC), Dorad, Dalia Power Energies, and smaller industrial customers.

The development agreement for Karish and Tanin states that development of the fields is to be completed in the first half of 2021. Energean sent its announcement to its customers in Israel and to the government-owned Israel National Gas Lines Company.

Most of Energean's contracts set an interim period in which the company is scheduled to gradually increase the quantity of gas supplied.

Published by Globes, Israel business news - en.globes.co.il - on February 6, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Energean's FPSO Photo: TFMC Energean
Energean's FPSO Photo: TFMC Energean
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