UK's Energean confirms first Israeli gas now expected in H2 2021

London — First gas from Energean's fields offshore Israel is now expected in the second half of 2021, the company confirmed Sept. 10, with the work program on its dedicated production vessel meaning a previous target of first gas in the first half will now not be met.

UK-listed Energean is developing a cluster of gas fields offshore Israel, comprising the Karish, Tanin and Karish North fields, and hinted in June that the timetable for first gas could slip according to a new timetable for work on the dedicated 8 Bcm a year floating production, storage and offloading vessel Energean Power in Singapore.

CEO Mathios Rigas said the project had suffered some coronavirus-related disruption.

Despite that, Rigas said Energean had made "solid progress" on the project "which is scheduled to deliver first gas in H2 2021."

The company said it had issued force majeure notices to its Israeli gas sales customers to mitigate any penalties arising from the delays to first gas that were caused by the coronavirus.

Energean has firm sales agreements for 5.6 Bcm/year of gas with Israeli buyers and hopes to secure more offtake deals to be able to fully utilize the FPSO's capacity.

"Over the life of the contracts, the agreements account for approximately 75% of the current 2P reserve plus 2C resource base of 99 Bcm," the company said.

"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 2.4 Bcm/year of spare capacity in the Energean Power FPSO," it said.

"Energean is assessing a number of opportunities in both the Israeli domestic market, as well as key export markets in order to meet this target."

Karish North FID

Rigas said that in the year to date, Energean had performance-tested all three Karish development wells and delivered a resource upgrade at Karish North.

The Israeli energy ministry approved the 34 Bcm Karish North field development plan last month, Energean said.

"Final investment decision on the Karish North project is expected before year end 2020," it said.

Rigas also said he hoped to close the acquisition of Edison E&P, the upstream arm of the Italian utility, in the fourth quarter of 2020.

"Following completion of the deal, around 70% of our future production will be sold under long-term gas sales agreements that will largely insulate us against oil price volatility," Rigas said.

"We will continue to own and operate the majority of our asset base and are well-funded for all of our projects."

Energean said in June it had agreed significantly revised terms for its acquisition of Edison E&P after the deal hit a number of obstacles since it was agreed in July 2019.

Energean had agreed to buy Edison E&P for $750 million, but changes in the macro-economic environment and other factors have meant the deal had to be significantly restructured.

The agreement came unstuck first when the Algerian government blocked the sale of Edison E&P's assets there and then Neptune Energy pulled out of deal to buy the Norwegian and UK assets from Energean.

Under the new terms with Edison, Energean said it now expects its net consideration for the company to be just $190 million for the revised package of assets that now excludes both the Algerian and Norwegian businesses.