Expansion of Israel's Leviathan faces delay on security situation: NewMed

The first-phase capacity expansion at the giant Leviathan gas field offshore Israel faces a delay due to the escalating security situation in the region, project partner NewMed Energy said late Oct. 6.

NewMed is the largest shareholder in Leviathan with a 45.3% stake, alongside operator Chevron (39.7%) and Ratio Energies (15%).

The partners took the final investment decision on the production capacity expansion project -- which will see a third subsea transmission pipeline laid from the field to the production platform -- in July 2023.

It will increase production capacity at the field from 12 Bcm/year to approximately 14 Bcm/year. The project had been expected to be completed in the second half of 2025.

However, NewMed said work on laying the subsea pipeline as part of the third gathering pipeline project had been suspended until around April 2025.

The exact timing would depend on the performing contractor's timetable and work schedule, and on the regional security situation, it added.

In emailed comments Oct. 7, operator Chevron said it continued to work with the government of Israel, its contractors and all stakeholders to progress efforts to expand the production capacity from both Leviathan and Tamar.

Chevron briefly shut in both the Leviathan and Tamar facilities on Oct. 1 as Iran fired missiles at Israel in a major escalation of the crisis in the Middle East before resuming production on Oct. 2.

NewMed said Oct. 6 that given the latest developments in the security situation, production from Leviathan which started up in December 2019could be halted "from time to time" for certain periods of time.

But it said that as of Oct. 6, aggregate "harm" from the production halts had not been material relative to the annual production volume.

Major producer

Israel is now a major gas producer, with output having reached a record high of 24.7 Bcm in 2023, according to Israeli energy ministry data published in May.

Gas production comes from Tamar, Leviathan and a third offshore field, Karish, and rose further in the first half of 2024 by 7% year on year to 13.1 Bcm, suggesting it is on track for record production in 2024.

Of Israel's 2023 gas output, some 11.6 Bcm was exported to Egypt and Jordan, a 25% year-on-year increase.

Egypt is increasingly dependent on pipeline imports from Israel due to declining domestic output, and has also turned to LNG imports this year to help meet demand.

It comes as delivered spot LNG prices to the East Mediterranean continue to trade well above $10/MMBtu.

Platts, part of S&P Global Commodity Insights, assessed the DES LNG East Mediterranean marker at $13.08/MMBtu on Oct. 4.

The third pipeline at Leviathan is the first part of an expansion strategy whose ultimate aim is to bring output capacity to 21 Bcm/year.

NewMed has said previously that the expected budget for the first-phase expansion project was some $568 million.

In 2023, a total of 11 Bcm was sold from Leviathan, down from 11.4 Bcm in 2022, according to NewMed data.

NewMed said the gap in sales mainly derived from the start of commercial production from the Karish field to customers in the local market.

Leviathan gas was also used for domestic consumption -- particularly for power generation -- while the Tamar field was closed for around one month following the attack by Hamas militants on Oct. 7, 2023.

NewMed said some 2.7 Bcm of gas from Leviathan was supplied to Jordan's electricity company last year, while some 6.3 Bcm was piped to Egypt, up 28% year on year.