UK-listed upstream company Energean Oil and Gas hopes to discover more gas from its licenses offshore Israel to help meet growing gas demand in the country, CEO Matthaios Rigas said Monday.
Rigas, speaking at an industry event in London, said the economics of Energean’s plans to develop gas resources offshore Israel based on a floating production facility would be “very difficult to beat” in the region.
Energean is developing the Karish and Tanin gas fields in Israel — holding some 2.4 Tcf (68 Bcm) of gas — with first production expected in the first quarter of 2021.
The dedicated 8 Bcm/year FPSO named Energean Power — which earlier this month floated out of its Chinese shipyard — will feed the gas into pipeline infrastructure linking to shore in Israel.
“If you have an FPSO with pipeline tie-backs it is easier to monetize [the resources],” Rigas said.
Energean bought the Karish licenses from Israeli explorer Delek in December 2016 and since then has signed 15-year, long-term contracts for 4.3 Bcm/year of production from the project.
The contracts, Rigas said, have take-or-pay provisions and a guaranteed floor price, meaning the company would expect $13-$14 billion in revenues over the 15-year period.
In addition, he said, there is remaining capacity in the 8 Bcm/year FPSO that the company was “actively marketing”.
Rigas said the company had licenses for more blocks offshore Israel close to the FPSO’s intended location and that the company was sitting on 280 Bcm of proven and prospective resources.
Energean also made a gas find in April this year with the Karish North well, with initial estimates suggesting gas-in-place of 28-42 Bcm.
Rigas said Israel would provide a growing market to absorb increased Energean gas output.
The Israeli government, he said, was “taking all right steps” to move away from coal-fired power generation and become energy independent.
Israeli gas demand, Rigas said, was expected to rise to some 30 Bcm/year in the mid-2030s as a result, from around 11 Bcm/year now.
Rigas said the Mediterranean would remain the company’s focus even after the completion of its acquisition of the upstream business of Italy’s Edison, announced in July.
The purchase price of the acquisition — expected to close in Q4 2019 — was $750 million, with a further $100 million payable following first gas from Edison E&P’s Cassiopea development offshore Italy in 2022.
Edison also has upstream assets in Norway and the UK, but Energean plans to sell those assets, Rigas said, to keep the focus on the Mediterranean.
Energean wanted assets in its portfolio that were located “no more than a three-hour flight from Athens”, Rigas said.
When the Edison acquisition closes, Energean will have production of some 73,000 b/d of oil equivalent with a trajectory toward 200,000 boe/d once the Energean Power FPSO reaches full capacity.
It also plans to drill a well at Egypt’s North Thekah Offshore and North East Hap’y Blocks before the end of 2019, Rigas said.