Greek energy company Energean Oil and Gas plc (LSE: EGOG; TASE: EGOG) has signed an agreement with Israeli private power plant operator IPM Beer Tuvia to supply 5.5 billion cubic meters (BCM) of natural gas from its offshore Karish and Tanin floating production and offloading (FPSO) rig over 19 years.
The gas sales and purchase agreement would add between 0.265 and 0.38 BCM of gas sales, commencing in 2024, for about $900 million over the 19-year deal.
The contract also includes an option for Energean to supply IPM with limited volumes between 2021 and 2024, and also allows IPM to increase volumes up to 0.55 BCM a year, the company said.
The gas supplied by Energean will be part of the total quantity of gas required for IPM's new power plant, which is due to start operating in the second half of 2020.
The contract is subject to necessary approvals and contingent on results of the Energean's 2019 drilling program, which includes the drilling of four wells in Israel, commencing with the spud of Karish North in March 2019, targeting 36.8 BCM of gas with a volume weighted geological chance of success of 69%.
Energean CEO Mathios Rigas sauid, "This additional gas sales agreement aligns with Energean's strategy to secure offtake for the remaining spare capacity in our 8 BCM/yr FPSO and to commercialize the resource being targeted by our upcoming drilling program, providing competition and energy security to the Israeli domestic market."
Published by Globes, Israel business news - en.globes.co.il - on January 2, 2019
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