Noble Energy and its partners in the giant Leviathan gas field offshore Israel are working towards sealing another gas offtake deal ahead of the expected final investment decision for the project.
Noble’s Israeli partner Delek said on Wednesday afternoon that a non-binding letter of intent was signed with Edeltech for the supply of natural gas from the Leviathan field. Edeltech is an Israeli investment company in the infrastructures and energy sectors.
Under the Letter of Intent signed on January 16, 2017, the parties will hold talks on reaching the binding agreement for the Leviathan gas sale.
According to Delek, the estimated scope of the Binding Agreement is for the supply of a total quantity of approximately 14.8 billion cubic meters for a period of 17 years. The price of the gas would be linked to the electricity production tariff, as determined from time to time by the Electricity Authority.
To remind, the Leviathan partners had signed the first gas sales deal with Edeltech back in January 2016, with the company committing to buy 6 billion cubic meters, over a period of 18 years for its to-be-built gas plants.
According to the agreement made in January 2016, Edeltech was entitled to adjust the gas quantities purchased (including the total contractual quantity) until the date of start of the gas flow, according to the size of the power plants that will be built. Also, the deal was, among other conditions, subject to the Leviathan FID being made by the end of 2016, which did not happen.
It is not clear if the letter of intent signed this week and the expected firm deal would make the original 2016 agreement.
First gas in 2019
The development plan for the behemoth gas field in the Mediterranean Sea was approved by the Israeli partners in December 2019, with the project expected to be sanctioned by the operator Noble Energy in early 2017.
The plan anticipates the production of 12 billion cubic meters of natural gas per year (1.2Bcf/d) at a scope of $3.5-4 billion and involves a subsea system that connects production wells to a fixed platform located offshore with tie-in onshore in the northern part of Israel.
The first production, subject to Noble not stalling with the FID, could start by the end of 2019.
As for the gas sales, apart from Edeltech, a new buyer was recently found for the Leviathan field gas as the partners inked a deal to sell the gas to Or Power Energies to be used for operating a power station. Under the deal signed on November 30, 2016, the Leviathan partners would supply the buyer with an overall amount of 8.8 billion cubic meters of natural gas.
Earlier in 2016, the partnership executed a gas sales and purchase agreement for the Leviathan field gas to the National Electric Power Company Ltd. (NEPCO) of Jordan for consumption in power production facilities. Under this agreement, the partnership agreed to supply a gross quantity of approximately 1.6 trillion cubic feet (Tcf) of natural gas from the Leviathan, or 300 million cubic feet per day (MMcf/d) over a 15-year term.
Offshore Energy Today staff