Greek firm Energean Oil & Gas PLC said Thursday its board has given the green light to a final investment decision that will enable the oil and gas explorer to proceed with the $1.6 billion development of the Karish and Tanin natural gas fields off Israel’s shores.
The company said that $405 million of the $460 million it raised in a recent initial public offering of shares in London will be used to fund its 70 percent stake in the project. The remaining 30% of the project will be funded by Kerogen Capital, Energean’s partner in the project, the Greek firm said in a statement.
The project is also being financed through a credit facility of $1.28 billion underwritten by Morgan Stanley, Natixis, Bank Hapoalim and Société Générale.
Energean said it has already secured long-term gas agreements with some of the largest private power producers and industrial companies in Israel, who have contracted purchases of a total of 61 billion cubic meters (BCM) of gas over a period of 16 years.
Energean will develop the project by setting up a floating production, storage and offloading (FPSO) facility that will have a gas treatment capacity of 8 BCM per year.
A 90-kilometer gas pipeline will link the FPSO to the Israeli coast and necessary onshore facilities to allow connection to the domestic sales gas grid operated by the national gas transmission company, the statement said.
Drilling at the Karish field will start in 2019, the statement said. Energean has estimated that the supply of the gas will start in the first quarter of 2021. The two fields are earmarked to supply natural gas to the domestic market.
Energean has also secured options to drill five further wells in the licenses it holds in Israel, the statement said.
Israel, a nation traditionally starved of natural resources, believes the discovery of natural gas reserved off its shores in the Mediterranean will lead it to energy independence and make it an exporter of gas. The Karish and Tanin natural gas fields sit alongside the larger Tamar and Leviathan deposits in Israel’s economic waters in the Mediterranean. In December 2016, Israel gave the go-ahead for the sale of the Karish and Tanin fields to Energean in an effort to increase competition in the domestic market.
The two fields are estimated to hold some 2.1 billion cubic feet of natural gas.
The Tamar field, with estimated reserves of up to 8.4 trillion cubic feet, which was discovered in 2009, began production in 2013. The even larger Leviathan field, discovered in 2010, is estimated to hold 18.9 trillion cubic feet, and is set to begin production in 2019. US firm Noble Energy Inc. and units of Israel’s Delek Group are stakeholders in these fields.
“The Karish and Tanin development will bring competition and security of supply to the Israeli gas market and will support Energean’s strategy to become a major player in the gas developments of the East Mediterranean,” said Energean Oil & Gas CEO Mathios Rigas in the statement.
“Owning and operating the only FPSO in the East Mediterranean with an 8 BCM per annum capacity gives Energean significant scope for growth through being able to support potential additional gas discoveries from Karish and Tanin and the five adjacent licenses that we own in Israel,” he said.