Chevron Corp. and its Israeli partners in the Leviathan project have agreed to invest about $568 million for the development of a third pipeline to serve the gas field.
The subsea conveyor “will enable the expansion of maximum gas supply capacity from the Leviathan project to INGL’s [Israel Natural Gas Lines Ltd.] transmission system from approx. 1.2 BCF [billion cubic feet] per day at approx. 1.4 BCF per day, starting in mid-2025,” Leviathan majority developer NewMed Energy said in a filing with the Israel Securities Authority on Sunday.
NewMed owns 45.34 percent of the 127.41-square-mile Leviathan natural gas field offshore Israel, which it says is the largest in the Mediterranean with 22.9 trillion cubic feet of recoverable gas. Chevron Mediterranean Ltd, which entered the Leviathan consortium after a merger that gave the US global giant full ownership of Noble Energy Mediterranean Ltd in 2020, has 39.66 percent. Ratio Energy has a 15 percent stake.
After an investment of $3.75 billion for the initial development of the field, Leviathan began production in December 2019 and has reached 423.78 Bcf of annual production capacity. Leviathan “has since become a cornerstone of gas supply to Israel, Egypt and Jordan,” NewMed says on its website.
The field recorded natural gas sales of 402.59 Bcf in 2022, according to NewMed’s annual report.
Leviathan has two operating pipelines extending a total of 74.56 miles through which output from the project’s four subsea wells is transported to an offshore platform that processes the gas.
The three partners are expanding the project to serve customers in Europe and Asia. “While the current development is strictly based on the Israeli natural gas network and a pipeline network, Phase B of the project is expected to include a significant liquefaction component, which will expand Leviathan’s customer base beyond from the Eastern Mediterranean, towards Europe and the Far East,” says NewMed on its portal. “To this end, commercial negotiations are underway with two existing liquefaction facilities in Egypt, while an option for to the liquefaction of natural gas in a floating facility anchored in the Israeli EEZ. [exclusive economic zone] is being explored.”
Developers see an opportunity in the change in gas trade induced by the Russian invasion of Ukraine in February 2022. “Recently, many European countries are looking to diversify their sources of natural gas, with the aim of reducing dependence of natural gas from Russia, which led to a significant increase in demand for natural gas, especially in areas where pipelines can be connected for the transmission of natural gas to Europe, as well as an increase in demand for LNG” , NewMed said in its annual report. “The Partnership, along with its partners in the Leviathan and Aphrodite projects, is examining the impact of these factors on development and/or expansion options for its assets.”
In the final investment decision made by the three partners on Thursday, NewMed has committed about $258 million.
“According to the Association’s estimation, its participation in the aforementioned budget will be financed from its own resources and its current cash flows,” NewMed said.
It had $83.9 million in cash on hand at the end of the first quarter of 2023, according to its quarterly report.
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