UK-based gas producer Energean, focused on production and projects in the eastern Mediterranean, has raised its development and production expenditure guidance in Israel to reflect plans for a new pipeline and early achievement of milestones at the Katlan offshore project.
Energean’s capex in Israel is now forecast to be $480 million-$500 million, up from $380 million-400 million previously expected, the London-listed company said in a trading update on Wednesday.
The increase reflects inclusion of the Nitzana pipeline expenditure and the earlier-than-anticipated achievement of key milestones, and thus payments, at the Katlan project.
Energean last month signed a transmission agreement with Israel Natural Gas Lines Ltd for capacity in the Nitzana pipeline, the new planned route for Israeli gas to Egypt.
The Nitzana pipeline is a new onshore pipeline that will be built from Ramat Hovav in Israel to the border with Egypt in the Nitzana area.
Energean also sees total expected Katlan expenditure unchanged at $1.2 billion per the Final Investment Decision announcement. Next year will mark the peak year of activity on Katlan, which will include expenditure on development well drilling and subsea installation, the company said.
In another landmark deal in the fourth quarter, Energean and Helleniq Energy signed in November a farm-in agreement under which U.S. supermajor ExxonMobil will buy 60% in the Block 2 concession in the northwestern Ionian Sea offshore Greece.
Energean will remain the operator of the concession during the exploration stage, but if the partners make a hydrocarbon discovery, ExxonMobil will assume operatorship during the development stage.
Block 2 is the most mature concession in Greece in terms of readiness for exploratory drilling, according to Energean.
Greece, Israel, and Egypt will be key growth areas for the company going forward, CEO Mathios Rigas said today.
“At the same time, we remain committed to growing organically within our high-quality portfolio while actively evaluating new opportunities, particularly in West Africa, where we see significant potential for value-accretive expansion,” Rigas added.
By Tsvetana Paraskova for Oilprice.com
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