The Tamar gas field may be upgraded at a cost of between $1.5 billion and $2 billion, including the construction of an underwater pipeline to a plant in Egypt run by Spain’s Union Fenosa Gas, the partners that own and operate the field said Thursday.
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The partners are considering expanding production with three new wells and upgrading a production platform near Ashkelon, with the aim of doubling the field’s capacity to 20 billion cubic meters annually, said Delek Group, which owns Tamar together with Noble Energy of Texas and Israel’s Isramco and Dor Alon.
The pipeline is contingent on the partners signing a supply deal with UFG, it said. Delek said the expansion program is to be in place by 2017.
Shares of Delek Drilling and Avner, the two Delek Group units with stakes in the Tamar field, rose by 1.1% to 19.20 shekels ($5) and 0.8% to 3.43 shekels, respectively, in Tel Aviv Stock Exchange trading Thursday.
The two companies revealed the plans for Tamar in their third-quarter financial reports.
In May the Tamar partners signed a nonbinding agreement to deliver about 4.5 billion cubic meters of gas a year for 15 years to UFG’s liquefied natural gas terminal in Egypt in a contract valued at $20 billion. The gas will be processed into LNG for reexport to Europe.
But UFG’s plant in Damietta — which has been idle since 2012, when gas shortages in Egypt led the government to divert supplies to its growing domestic needs — has the capacity to process seven billion cubic meters, which Tamar could fulfil.
Tamar, Israel’s second largest has field after Leviathan, has been supplying Israel with natural gas since it came online last year.
Meanwhile, Delek Group said that the first-stage cost of developing Leviathan, which it controls with Noble and Israel’s Ratio, would cost between $6 billion and $7 billion. Some $200 million will be put into the field now for equipment and critical services, with the aim of the first gas coming online in the first quarter of 2018, it said.
Delek Drilling and Tamar said the Tamar field produced about 2.2 billion cubic meters of gas in the third quarter and expected production to reach eight billion for all of 2014.