Energean Signs Israeli Gas Sale MOUs
Greek upstream producer Energean signed memos of understanding August 8 for the supply of 3bn m³/yr of natural gas from Karish and Tanin, two offshore Israel natural gas fields that are pending development.
Energean, ICL and Israel Refinery are expected to complete negotiations within six months. Once firmed up, these are expected to be the anchor contracts for the two fields, development of which is subject to a final investment decision (FID) expected by end-2017.
The MOU with Israel Refinery is for the supply of 17bn m3, estimated to be worth $2.5bn, while the MOUs with the two other companies Israel Chemicals Ltd (ICL) and its subsidiary OPC together are for the supply of 13bn m3, worth $2bn. All three planned contracts cover a 15 year period.
Valuations are based on an average price of $4.20/mn Btu, about 20% less than the average price Tamar Partnership currently charges Israeli customers and about 27% less that what it charges its largest customer, state-owned Israel Electric Corp.
ICL is controlled by Israel Corporation which is controlled by Idan Ofer, one of the wealthiest Israelis who is now based in London. ICL and Israel Refinery conducted joint negotiations with Energean in order to leverage their scale in order to secure the three draft contracts at the lowest cost.
Ofer is active in projects outside Israel too, including Quantum Power which is looking to develop a Ghana LNG import project in mid-2018.
Energean submitted its development plan for Karish and Tanin gas fields to Israel's energy ministry in June for approval.
Ya'acov Zalel