Greek company Energean Oil & Gas plans to build its own production system on the eastern Mediterranean at a cost of up to $1.5 billion to tap two Israeli offshore gas fields, the group’s CEO told Reuters in an interview on Wednesday.
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Greece’s only oil producer is also looking to bring a financial partner into the project to develop the Tanin and Karish fields, which are situated in deep waters around 100 kilometers off Israel’s coast and have combined gas reserves estimated at 2.4 trillion cubic feet.
Energean bought Karish and Tanin last August for $148 million from U.S.-Israeli partners Delek Group and Noble Energy, who are developing two much larger fields nearby and were required by Israel to sell off other discoveries in an effort to open up the sector to competition.
Rather than piggyback off that group’s infrastructure, an idea previously floated by some experts, Energean plans to lease its own floating production, storage and offloading vessel and build a separate pipeline to Israel, Energean CEO Mathios Rigas said.
“We are going to be a totally independent system,” Rigas said, adding that a combination of local and international banks will help provide the $1.3 billion-$1.5 billion in financing that will be needed.
Before making a final investment decision, which is expected in December, the Israeli government must first approve the development plan and Energean needs to secure sales contracts for 3 billion cubic meters of gas per year, Rigas said.
Israel has determined that gas from Tanin and Karish must be sold domestically.
The Israeli fields are Energean’s biggest assets and the company is looking to lighten the load. “In the next three to six months maximum we will bring in a financial partner that will work with us to share the risk and help us develop the project,” Rigas said.
He expects gas production to begin in 2020.