Leviathan group, in push to boost gas output, updates reservoir value to $12.5b

Sales from offshore gas reservoir in 2022 rise to $2.5 billion; partners have plans to increase annual gas supply by about 2 BCM with new subsea pipeline expected in 2025

Sharon Wrobel is a tech reporter for The Times of Israel.

Israel's offshore Leviathan gas platform. (Albatross)
Israel's offshore Leviathan gas platform. (Albatross)

Partners in Israel’s Leviathan gas field off the Mediterranean coast say plans to boost annual production and exports in 2025 to meet growing demand push the estimated value of the reservoir to $12.5 billion.

NewMed Energy, formerly Delek Drilling (part of Yitzhak Tshuva’s Delek Group), which owns a 45.3% stake in Leviathan, said the partners are advancing plans for a third subsea transmission pipeline from the wells to the platform at an investment of $562 million to increase gas supply capacity.

Currently, a maximum capacity of up to 1.2 billion cubic feet of natural gas per day, or 12 billion cubic meters per year, is piped up from the Leviathan reservoir for the supply and sale of gas to Israel, Egypt, and Jordan.

The third pipeline would enable production output from the Israel offshore field to increase to about 1.4 BCF of gas per day or 14 BCM per year. Operation of the pipeline is expected to commence in 2025.

Leviathan, one of the world’s largest deep-water gas discoveries, contains an estimated 22 trillion cubic feet of gas approximately 120 kilometers west of Haifa at a water depth of 1.7 kilometers. Other partners in the gas field are US energy giant Chevron with a 39.66% stake and Ratio Oil Corp. with 15%.

“The third pipeline project marks the first step in expanding Leviathan and will allow us to increase the volume of production, sales and cash flow in a relatively short period of time,” said NewMed CEO Yossi Abu.

The partners in the Leviathan reservoir are also brewing plans for a floating liquefied natural gas (LNG) terminal off the Israeli coast, and in June, Israel, Egypt and the European Union signed a memorandum of understanding that will see Israel export its natural gas to the bloc for the first time. According to the agreement, Israeli gas could be supplied via Egypt’s LNG plants to the EU.

In a filing to the Tel Aviv Stock Exchange on Sunday, NewMed presented an updated report by Texas-based consultants Netherland, Sewell & Associates (NSAI), which evaluated the contingent resources at the Leviathan field taking into account production capacity following the third pipeline project.

“In light of the progress in the project, NSAI classified a significant part of the conditional resources as reserves,” NewMed stated. “The third pipeline project brings considerable value to the reservoir – the value of the reservoir has increased, and is now estimated at about $12.5 billion, an increase of about 10% compared to the estimate in the previous report.”

Partners in the Leviathan field sold 11.4 BCM of gas in 2022 for $2.5 billion. NewMed said sales were 1.3% higher than forecast in September 2022, and about 7% higher compared to the forecast published by the partnership at the beginning of 2022. NewMed’s share was estimated at about $1.14 billion.

In 2021, the partners in the gas field sold 10.7 BCM of natural gas for $1.95 billion.

Natural gas from Leviathan started to flow to the Israeli domestic market in December 2019. Israel’s natural gas operations have put the country on a path to energy independence — and have shielded it from the worst of the energy crisis sparked by the Russian war on Ukraine this year — in a region with few natural resources.

Both Israel and Egypt have emerged as gas exporters in recent years following major offshore discoveries, as Europe is determined to wean itself off dependence on Russian gas imports.

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