The Chevron Corp-led Leviathan consortium has received approval from Israel’s Energy and Infrastructures Ministry to export an additional 130 billion cubic meters (4.59 trillion cubic feet) of natural gas to Egypt, consortium member NewMed Energy LP said Wednesday.
The new volumes were agreed upon between the field partners and buyer Blue Ocean Energy earlier this year.
“The leaseholders intend to act to obtain the buyer’s approval for the provisions of the new approval as well as for satisfaction of all the conditions precedent for the entry into effect of the export agreement [with Blue Ocean] for Egypt”, NewMed Energy said in a regulatory filing.
The added quantities are expected to generate about $35 billion in revenue, according to NewMed Energy.
According to the new permit, the total volume for Leviathan exports to Egypt will be increased in increments as the upstream project expands.
“Until such time as the reservoir’s daily production capacity is 1,850 MMscf (the First Expansion) – the maximum total quantity shall be approx. 20.7 Bcm”, NewMed Energy said. “Until such time as the reservoir’s daily production capacity is 2,100 MMscf (the Second Expansion) – the maximum total quantity shall be approx. 95.6 Bcm”.
“After the Second Expansion – the maximum total quantity shall be approx. 130.9 Bcm (the total export quantity)”, it added.
Announcing the amended deal with Blue Ocean on August 7, NewMed Energy said, “The amendment to the export agreement determines a mechanism for the timing of commencement of the supply of the increased daily quantity, which is primarily based on the sellers’ estimate regarding the progress of the projects required for expansion of the daily supply quantity, and chiefly completion of phase one of the [Leviathan] expansion project and completion of the project for the construction of the Nitzana pipeline”.
“To the sellers’ assessment, as of the report date, the said projects are expected to be completed in 2029”, NewMed said then.
The ministry granted the new export permit on the condition that the Leviathan owners must first fulfil their domestic supply obligations, according to Wednesday’s filing.
“Beginning on 1 January 2036, the commissioner may, by a reasoned decision, reduce the maximum quantities by up to 60 percent, for all or part of the calendar year, in view of a change between the years in the gap between demand and supply in the domestic market, but without the same affecting the total export quantity… The new approval states that, based on the Ministry of Energy’s assessments as of the approval grant date, such a gap is indeed expected”, the filing said.
“In the event that, after the date of the Second Expansion, the actual production capacity of the leases increases and exceeds 2,100 MMscf per day, the leaseholders may export one half of the increase in production through spot transactions; and in relation to the second half, the leaseholders may submit an application to the Commissioner for increase of the maximum daily quantity or for increase of the excess quantity permitted for export through spot transactions”, the filing said.
It added, “Furthermore, concurrently with receipt of the new approval and at the request of the Ministry of Energy, the leaseholders have confirmed that they shall work together with the Natural Gas Authority on promotion of a platform for the secondary trading of natural gas for natural gas consumers in the Israeli market, and shall also jointly examine various options in connection with the natural gas quantities that may be directed to the trading platform once established, under spot agreements”.
Chevron operates Leviathan with a 39.66 percent stake. NewMed Energy, owned by Israel’s Delek Group, holds 45.34 percent. Ratio Energies LP, also an Israeli company, owns 15 percent.
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