A Memorandum of Understanding signed by Energean and INGL, will see $98 mln paid to the Greek firm for constructing and transferring to Israel Natural Gas Lines the onshore and near shore part of nat gas facilities for the Karish and Tanin development.
CEO of Energean, Mathios Rigas said: “This is another important milestone for the Karish and Tanin development. The collaboration with INGL demonstrates the Israeli government’s support and commitment to the Karish-Tanin project, from which natural gas will flow to the Israeli market”.
Energean Oil and Gas plc, listed on both London and Tel Aviv Stock Exchange, announced it has signed a MOU with Israel Natural Gas Lines (INGL) for the construction and transfer of the near shore and onshore part of the infrastructure that will deliver gas from the Karish and Tanin FPSO into the Israeli nat gas transmission grid.
Energean will receive 369 million Israeli New Shekels, approximately US$98 million, 15% of which is expected to contribute to the Company’s available liquidity between now and end 1Q 2019.
Another 80% is expected to become available at handover of the infrastructure in 2021, with the remaining 5% due following an 18-month warranty period.
The MOU covers the onshore section of the Karish and Tanin infrastructure and the near shore section of pipeline extending to approximately 10km offshore.
The handover to INGL will occur shortly after the delivery of first gas from the Karish field in 1Q 2021. Following the handover, INGL will be responsible for the operation and maintenance of this part of the infrastructure. Energean will not incur any charges or tariffs for use of this infrastructure.
Energean expects the detailed agreement to be signed in 1Q 2019.
Israel Energy Minister Yuval Steinitz said: “This is an important step in the way to further development of small and mid-size gas fields, relying on the infrastructure built for INGL. It will encourage exploration and development of natural gas and contribute to Israel’s energy security in the future”.
Chairman of INGL, Eitan Padan said: “This MOU, signed following a whole year of intensive negotiations, will contribute to the development of INGL Marine transmission system project, ‘Maagarim’, and will enable Karish-Tanin as well as other future fields to connect to INGL transmission grid, saving time and costs. With further adaptation, the system will be able to serve for Israeli gas export to future destinations as well”.
The Greek firm has also submitted a proposal to the Cyprus Government to supply natural gas to the country in the 1st quarter of 2021 at no upfront cost to the Cypriot citizens at a very competitive gas price,” a company source told the Financial Mirror recently.
“Energean always respects the rules and regulations of every country it operates in and has obviously confirmed its option to supply natural Gas to Cyprus in accordance with the proposal made,” the source added.
According to sources, Energean is unhappy that it is excluded from a tender to supply Cyprus with gas because the bids relate to LNG infrastructure only.
Those same sources argue that the project will be much more expensive compared to gas supplied through a pipeline.
Energean is seeking approval from the Cyprus government to build a pipeline from its Israeli offshore gas fields and import 0.5 to 1 billion cubic metres (bcm) of gas per year to the island.
“Free Market principles should see the most competitive gas price to end customer be promoted, irrespective of the chosen infrastructure development scheme,” said the source.
The energy firm believes the market should decide which is the better offer.
Cyprus’ Natural Gas Public Company (DEFA) has issued a tender for the design, construction and operation of a floating LNG import terminal to be located at Vasiliko Bay, near Limassol, separately of efforts to import the fuel by January 2020 to avoid EU emissions fines.
Energean is a London Premium Listed FTSE 250 and Tel Aviv Listed E&P company with operations offshore Israel, Greece and the Adriatic. Energean has 349 mmboe of 2P reserves and 48 mmboe of 2C resources across its portfolio.
In March 2018 the Company took the Final Investment Decision (FID) for its flagship Karish-Tanin gas development project, where it intends to use an FPSO and produce first gas in 2021.
Energean has already signed firm contracts for 4.2 bcma of gas sales into the Israeli domestic market. Future gas sales agreements will focus on both the growing Israeli domestic market and key export markets in the region.
It has “significant exploration upside” from its five exploration licences offshore Israel, a 25-year exploitation licence for the Katakolo offshore block in Western Greece and its other licences in Western Greece and Montenegro.
