Leviathan partners ink $650 million natural gas deal to supply Eshkol power plant

The new contract is for the supply of natural gas to operate the Ashdod-based power plant owned by private Israeli electricity producer Dalia Power Energies

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

Eshkol power plant, Israel's largest natural gas powered plant, near the port of Ashdod. (Courtesy)
Eshkol power plant, Israel's largest natural gas powered plant, near the port of Ashdod. (Courtesy)

Partners in Israel’s Leviathan reservoir have inked an agreement to supply natural gas from the field off the Mediterranean coast to Eshkol Power Energies, in a deal worth $650 million.

The deal comes after state-owned Israel Electric Corp at the end of 2023 sold its Ashdod-based Eshkol power station to Eshkol Power Energies, a private consortium between local partners including local electricity producer Dalia Power Energies, for about NIS 9 billion ($2.45 billion).

As part of the seven-year contract, the Leviathan partnership will supply natural gas of about 0.5 billion cubic meters annually from the gas field. Delivery of gas supply is expected to start in June. The contract joins agreements that Dalia Power Energies has secured in recent months with two other local gas suppliers.

“With this contract, we have completed the preparations needed for operating the Eshkol power plant and boost competition in the electricity market to lower energy prices for the public,” said Dalia Power Energies CEO Oved Debby.

The Eshkol power station, the country’s largest plant fueled by natural gas with a capacity of 1,680 megawatts, was sold by the Israeli government as part of the structural reform of the electricity sector announced in 2018. The reform aims to encourage independent power producers to enter the market and boost competition as demand for electricity is growing. It is the fourth power station sold by the state-owned Israel Electric Corporation to the private sector of the five earmarked for divestment as part of the reform.

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. Partners in the gas field are US energy giant Chevron, with a 39.66% stake; NewMed Energy, formerly Delek Drilling (part of Yitzhak Tshuva’s Delek Group), which owns a 45.3% stake; and Ratio Oil Corp., with 15%.

View of the Israeli Leviathan natural gas field gas processing rig as seen from Dor Habonim Beach Nature Reserve, on January 1, 2020. (Flash90/File)

Jeff Ewing, Managing Director of Chevron’s Eastern Mediterranean business said that the new contract “demonstrates Chevron’s ongoing commitment to meet Israel’s growing demand for natural gas.”

Natural gas from Leviathan started to flow to the Israeli domestic market in December 2019. The country’s natural gas operations have put it on a path to energy independence in a region with few natural resources. Back in 2020, Israel started pumping natural gas to Egypt from the Leviathan gas field.

“Chevron also remains focused on safely and reliably delivering natural gas to neighboring countries and beyond,” Ewing said.

The Eshkol power plant, named after Israel’s third prime minister Levi Eshkol, is located in the industrial zone of Ashdod near the port, and has a total surface area of approximately 470,000 square meters. The plant was the first to be converted to run on natural gas for the production of electricity.

Dalia Power Energies operates Israel’s largest private power station, Dalia, east of Kiryat Malachi in the south. It supplies about 10% of the total electricity produced in the country, according to its website, and is powered by natural gas from the offshore Tamar gas reservoir.

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