Delek Drilling, Avner Oil Exploration and Noble Energy signed a memorandum of understanding Wednesday with the government of Cyprus, launching talks for the construction of a $10 billion liquefied natural gas terminal on the island to tap vast reserves in the eastern Mediterranean seabed.
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The deal is the first in a series of agreements required for the implementation of the project, which is expected to include additional partners as well.
A target date of December 31 is specified for the completion and signing of a definitive deal.
"On this basis, it is planned that the first [liquefied natural gas] cargo would be delivered from the Vasilikos plant to international markets in late 2019, early 2020," an official statement said.
Fuel must be converted to liquefied natural gas before it can be transported by ship to distant locations such as Southeast Asia where gas is sold at double the going price in Europe.
The facility will be used for exporting gas extracted by Noble Energy, Delek Drilling and Avner from the Aphrodite field in Block 12 of Cypriot territorial waters.
U.S.-based Noble Energy owns a 70% share of the license for Block 12, while Delek Drilling and Avner – both subsidiaries of Yitzhak Tshuva's Delek Group – hold the remaining 30% in equal shares.
Block 12, believed to contain 7 trillion cubic feet of natural gas, is just east of Israel's Leviathan field, with its estimated 19 trillion cubic feet of gas.
Energy and the Delek Group companies will reportedly be allowed, under the agreement, to expand the use of the facility to also serve gas discoveries in other license areas belonging to Cyprus, and to discoveries "in neighboring countries." This provision is likely in reference to the Leviathan field, where Delek Group is also a partner.
The initial plans for a land-based terminal were formulated over the past few months. Construction is expected to employ an estimated 5,000 workers. A workforce of 500 will required to operate the terminal once it is completed.
Delek Drilling and Avner both fell about 2% in Wednesday trading following the announcement.