Partners in the Leviathan gas field in the eastern Mediterranean have approved nearly $100 million of spending on preparation for expansion that includes a floating liquefied natural gas (LNG) terminal off the coast of Israel, the companies said on Tuesday.
Leviathan, a deep-sea field with huge deposits, came online at the end of 2019 and produces 12 billion cubic meters (bcm) of gas per year for sale to Israel, Egypt, and Jordan. The idea is to boost capacity to include sizeable volumes for Europe as it seeks to reduce dependence on Russian energy.
"The development plan ... will enable a significant increase in production to 21 bcm (billion cubic meters) a year," said Yigal Landau, CEO of Ratio Energies RATIp.TA.
NewMed Energy, partner with Ratio and Chevron Leviathan, said the group would spend $45 million to plan initial production expansion and a further $51.5 million on preparations for the floating LNG terminal.
The floating facility is expected to have an annual LNG capacity of about 4.6 million tonnes or 6.5 bcm, NewMed said.
Israel, Egypt, and the European Union last year signed a memorandum of understanding for Israeli gas to be sent to Europe through LNG plants in Egypt.
Israeli Foreign Minister Eli Cohen met U.S. energy envoy Amos Hochstein on Tuesday and discussed the Israeli energy sector's potential to help Europe as well as the Middle East, where Israel hopes to normalize ties with more Arab countries.
"Some of the regional stability we aspire to comes, among other things, from stability in the energy market," Cohen said, adding that Israel is strengthening ties with its neighbors to establish new supply chains.
It will take about three years from a final investment decision before the extra gas begins flowing to Egyptian LNG plants and the local market, said an industry source familiar with the project. The floating LNG component will come online after that.
"The local, regional, and global markets are awaiting this move, and we are working vigorously to advance it," said NewMed CEO Yossi Abu.
(Reuters - Reporting by Ari Rabinovitch/Editing by David Goodman)