Mediterranean-focused oil and gas company Energean has signed agreements to sell more gas from its Karish gas development off Israel.
Energean said Wednesday it had signed two gas sales deals which, combined, represent quantities of gas of up to 1.4 bcm/yr and increase total firm contracted gas sales from its flagship Karish project to approximately 7.0 bcm/yr on plateau.
"The new agreements represent contracted revenues of more than $2.5 billion over the life of the contracts, but require no further capital investment beyond Karish North, upon which Energean Israel expects to take Final Investment Decision later this year," Energean said.
Energean made the Final Investment Decision for the Karish main field development project in March 2018. The Karish main field will be the first asset to be developed in the Karish and Tanin blocks by Energean.
The company last year also announced the Karish North discovery estimated to hold 250 million barrels of oil equivalent (mmboe, 70% net to Energean), of which 84% is gas. This discovery will be tied-back to the Energean Power FPSO currently being built in Singapore.
The buyers
The majority of the quantities are represented by a deal to supply gas to the Ramat Hovav Power Plant Limited Partnership, a partnership between the Edeltech Group and Shikun & Binui.
The partnership, Energean said, was the winning bidder in the Israel Electric Corporation (“IEC”) Ramat Hovav tender process, the second IEC power plant in a series of five to be privatized.
The gas sales agreement is for a term of up to 20 years and contains provisions regarding floor pricing for the main plateau period and exclusivity. The annual contract quantity reduces after the first seven years following the first gas from Karish, which is expected in the second half of 2021.
The remainder of the quantities are represented by a second new gas sales agreement that has been signed with an affiliate of the RH Partnership for the supply of gas for other existing power stations. Gas supply will start following first gas from Karish - achieving the plateau rate from January 2024. The contract term is for up to 15 years and the GSPA contains provisions regarding floor pricing for the main plateau period and take-or-pay.
Energean Israel now has firm GSPAs in place for the supply of approximately 7.0 bcm/yr on plateau.
"Having secured sufficient resources to fill the FPSO for a number of years, Energean’s near-term strategy is to secure the necessary offtake to fill the remaining 1.0 bcm/yr of spare capacity in the 8 bcm/yr Energean Power FPSO," Energean said.
"Energean is assessing several opportunities in both the Israeli domestic market and key export markets in order to meet this target, alongside reviewing further growth opportunities across the nine exploration blocks that it holds in Israel to further expand its presence in the Eastern Mediterranean," the company added.
Energean last week said it expected that the FPSO being built for the eastern Mediterranean Sea project would set sail from Singapore in the summer of 2021.
The FPSO, called Energean Power, is currently in Singapore where the China-built hull is being fitted with topside modules. The first module was installed on August 24.
Installation of the risers that will connect the production wells to the FPSO is expected to start in 4Q 2020 and to be completed in 1Q 2021, marking the completion of the subsea works required ahead of arrival of the Energean Power FPSO.
Onshore, the works are progressing and the whole system is expected to be ready to receive first gas in 2Q 2021, ahead of the expected hook-up of the FPSO, Energean said.
According to WorldEnergyReports, the FPSO will be spread moored with 14 mooring lines in a water depth of 1,750 m. Lankhorst will supply 28 rope lengths totaling 43,400 m. Energean last month said it had completed the installation of the suction anchors that will keep the FPSO in place off Israel.