The Delek Group is moving forward to advance the Leviathan development plan with an accelerated plan for first gas to flow in 2019, as the Israeli company revealed it has already begun discussions with Israel’s government ministries to reach a solution to the stability clause.
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Image from Delek Group. |
“With regard to the recent Israeli High Court of Justice decision on the natural gas outline, most of the outline’s sections were upheld with the exception of the stability clause,” Asaf Bartfeld, Delek Group president and CEO said. “One of our main goals in 2016 is to progress with the development of Leviathan. We have already started discussions with the government ministries in order to reach a solution with regard to the stability clause, while implementing the outline in accordance with the original plan.”
The Leviathan field is located in the Mediterranean Sea, about 130km off the coast of Israel in 1600m of water. It is one of the largest discoveries in the past decade, andis estimated to contain 22 Tcf of natural gas.
On Sunday (27 March), Israel’s Supreme Court stalled Leviathan’s development after affirming the country’s natural gas regulatory framework, with the exception of the stability provisions. The court determined that the Israeli government should provide stability assurances and provisions through an alternate legal mechanism, and gave the government up to one year to resolve the issue, according to Houston-based Noble Energy.
"The court's ruling, while recognizing that timely natural gas development is a matter of strategic national interest for Israel, is disappointing and represents another risk to Leviathan timing," David L. Stover, Noble Energy's chairman, president, and CEO said on Sunday. "Development of a project of this magnitude, where large investments are to be made over multiple years, requires Israel to provide a stable investment climate.
The most recent plan for Leviathan was submitted to the petroleum commission in February, and details an accelerated schedule that will allow for first gas flow to the Israeli market in 2019. Maximum production capacity for the first development phase’s final stage is anticipated to be at an annual rate of 21 Bcm, representing an increase of 5 Bcm from the previous plan’s16 Bcm per year.
“2016 will be marked by the advancement of the development plan of Leviathan, as well as continuing to identify opportunities and making strategic investments in the international energy market. We continue to look for synergistic and complementary investments to the Group’s activities,” Bartfeld said.
In December, the Israeli government approved Leviathan’s outline plan to increase the amount of natural gas produced from the Tamar natural gas field and the rapid development of the Leviathan, Karish, Tanin and other natural gas fields.
In order to implement the Israeli government gas outline plan, Delek Group’s gas subsidiaries have been conducting negotiations together with their partners in the Leviathan project to market natural gas from the Leviathan project to potential consumers in the local market, including private electricity producers and industrial consumers, in accordance with the prices for natural gas and agreement periods as set out in the gas outline plan, Delek said.
Israel's Prime Minister Benjamin Netanyahu, expressed his frustration with the court ruling, saying it "severely threatens" the country's ability to develop its natural gas reserves.
"Israel is seen as a state with excessive judicial interference in which it is difficult to do business," he said on 27 March. "Certainly, nobody has any reason to celebrate that the gas is liable to remain in the depths of the sea and that hundreds billions of shekels will not reach the citizens of Israel.
Noble operates Leviathan with 39.66% interest. Partners include Delek Drilling (22.67%), Avner (22.67%), and Ratio Oil Exploration (15%).
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See OE's past Leviathan coverage here.
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