Greek oil company Energean Oil & Gas has teamed up with the private equity fund manager Kerogen Capital, which committed to invest in the $1.3 billion development of the Karish and Tanin gas fields, offshore Israel.
Energean’s Israel entity is the operator of and holds a 100% interest in the Karish and Tanin licenses, acquired from Delek Group in December 2016, for a consideration of $40 million as well as $108.5 million in contingent payments.
The fields contain at least 2.4 Tcf of gas contingent resources and will be developed through an FPSO, which will be the first to be installed and operated in the East Mediterranean. The gas produced from the fields will supply Israel’s growing domestic gas market, with first gas expected in 2020.
The Greek company said on Wednesday that proceeds from an initial $50 million investment by Kerogen in Energean Israel would finance the acquisition and key workstreams to investment sanction including FEED studies and the Field Development Plan currently being prepared in cooperation with TechnipFMC.
To remind, TechnipFMC was recently selected as a contractor for the Concept and Front End Engineering Design (FEED) for the development.
Energean also added that the investment is subject to approval by the Israeli Government, after which Kerogen would own a 50 percent interest in Energean Israel.
As a part of the deal, Roy Franklin, Kerogen’s Executive Board Member, will become a non-executive chairman of Energean Israel.
Talks with customers underway
Energean Group Chairman & CEO, Mathios Rigas, said: “We are delighted to welcome Kerogen to the Karish and Tanin project, planned to deliver gas to a rapidly growing market in 2020 for the benefit of Israeli domestic consumers and the economy.
“Energean has already commenced negotiations with potential gas consumers in Israel and is progressing rapidly with the Field Development Plan that we expect to submit to the Israeli Government by May 2017 with an intention to FID the project by year end 2017.
“We believe Israel is an attractive destination for energy investment offering exciting growth opportunities underpinned by a supportive government policy and favorable financing environment.”
Roy Franklin added: “Kerogen intends to collaborate with Energean to deliver a successful development of the Karish and Tanin fields in Israel. This investment provides Kerogen with exposure to a large-scale, low break-even discovered gas resource located within an OECD country, which, as a near-term development, can benefit from today’s deflationary cost environment.”