Lebanon protests as Energean floating rig reaches Israel

Energean Power Credit: Energean
Energean Power Credit: Energean

Israel says that the Karish gas field, which will begin producing gas next quarter, is well protected by its navy.

Greek energy exploration and production company Energean (LSE: ENOG; TASE: ENOG), which hold the rights to Israel's Karish offshore gas field, has announced that its floating production storage and offloading (FPSO) rig Energean Power has reached its docking point 80 kilometers from the coast of Israel. Following the announcement of the FPSO's arrival, Lebanon expressed protests and threats regarding the dispute over the border with Israel of its economic waters.

The dispute concerns a triangle of water regarding the angle of the border line from the coast that does not contain the Karish gas field. But Lebanon, to strengthen its hand in the negotiations, has declared that the dispute includes a larger area that does include Karish.

According to Lebanon's unilateral declaration, President Michel Aoun and Prime Minister Najib Mikati warned that there would be repercussions to the start of gas production. Mikati said, "The positioning of the rig represents an invasion into the economic waters by the enemy Israel. This is a grave and dangerous step that might ignite tension for which the repercussions cannot be predicted."

Nasrallah also joined the threats

Aoun instructed the Lebanese army to provide information and maps regarding the positioning of the FPSO rig and the gas field. "The negotiations to map the marine border in the southern waters are still continuing and any actions in a region that is in dispute represents a provocation and hostile activity."

Hezbollah leader Hassan Nasrallah made even more explicit threats, saying that Lebanon would not allow Israel to produce gas from the field and claimed that the field belongs to Lebanon and all Israeli gas drilling was in danger.

Israel said that all the country's gas fields, including Karish, the northernmost of its fields and closest to the Lebanese border, are protected by the Israeli Navy, with its various means, including ships and submarines, as well as sensors designed to detect any attempts to harm them. In addition, Israel warned Lebanon that any action against Israel's gas drilling rigs would receive an especially harsh response.

Energean said that the FPSO had been towed to the Karish field from Singapore by two tow ships. The 5,532 mile (8,900 kilometers) voyage had taken 35 days via the Suez Canal.

Energean has already begun anchoring the rig and connecting it to the gas field and operating the various systems. The company estimates that it will take three to four months until the initial gas from the field begins flowing in the third quarter of 2022.

Last month Energean signed a gas supply agreement with the Hagit East power station to supply up to 12 BCM of natural gas over 15 years for $2 billion. Energean has also signed two agreements with the Israel Electric Corp. to supply about 8 BCM of gas annually, the full production capacity of the gas field.

The start of gas production from the Karish field will introduce greater competition to Israel's energy sector, which lacks competitiveness by world standards, and will hopefully reduce prices and enhance energy competiveness.

The use of an FPSO to produce and process the natural gas, which is not fixed to the seabed, has a range of major technological advantages, which make it more efficient, cheaper, safer and more environmentally friendly than conventional methods.

Energean CEO Mathios Rigas said, "I am delighted to confirm that the Energean Power FPSO arrived safely in Israel this morning. This is the most major milestone towards the first gas from the Karish gas field, which is expected in the third quarter of the year. Our flagship project will provide energy security to Israel and the area and new competition in the region's gas market. This milestone joins the recent discoveries by Energean in the Olympus region, which will represent a significant base for the cmpany's continued growth and the development of the local and regional energy economy."

The natural gas will flow from the Karish gas field from 3-4 kilometers beneath the seabed through a pipeline to Isral's Mediterranean coast near Zikhron Yaakov, where it will connect to the national grid.

Minister of National Infrastructures, Energy and Water Resources Karine Elharrar welcomed the arrival of the FPSO. She said that the connecting up of a third Israeli gas rig (after Tamar and Leviathan) would allow more and more Israeli companies to move from burning coal and heavy industrial fuel to natural gas use.

She added that gas from Karish would enable Israel to increase its gas exports to Egypt and Jordan and countries in Europe, which need more energy sources due to the global energy crisis. Elharrar said that natural gas exports serve as diplomatic leverage and contribute to Israel's from a geopolitical point of view, while it retains the gas reserves required for domestic economic use.

Published by Globes, Israel business news - en.globes.co.il - on June 6, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Energean Power Credit: Energean
Energean Power Credit: Energean
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