Oil and gas company Energean, focused on bringing online the Karish gas field offshore Israel, said Tuesday it had signed a new Karish gas sales deal for up to 0.8 bcm/yr. It also said that the Energean Power FPSO, which will be used to produce gas from the Karish field, recently left the Singapore yard, and is now en route to Israel.
Energean has signed the gas sales deal representing up to 0.8 Bcm/yr, to supply gas to the East Hagit Power Plant Limited Partnership ("EH Partnership"), a partnership between the Edeltech Group and Shikun & Binui Energy. EH Partnership was the winning bidder in the IEC East Hagit tender process, the third IEC power plant in the current series of four to be privatized. Energean is also a supplier of gas to Ramat Hovav and Alon Tavor, the first two power stations privatized in the series.
The sales agreement is for a term of approximately 15 years, for a total contract quantity of up to 12 bcm. The contract contains provisions regarding floor pricing, offtake exclusivity, and a price indexation mechanism (not Brent price-linked). According to Energean, the agreement has been signed at levels that are in line with the other large, long-term contracts within Energean's portfolio. The agreement has the potential to generate revenues of up to $2 billion over the offtake period and is subject only to buyers' completion of the privatization process, including lenders' consent, the company said.
Combined with the spot sales agreement signed in March 2022 with IEC, the agreements have enhanced Energean's gas sales portfolio towards filling the 8 bcm/yr of capacity on the Energean Power FPSO.
Commenting on the gas sales deal, Mathios Rigas, Chief Executive of Energean, said: "We are delighted to have signed a new GSPA of up to 0.8 bcm/yr for our flagship assets in Israel, delivering on one of our key milestones for 2022. This is the third in a row for us from the Israel Electric Corporation ("IEC") power plant privatization program and I want to thank Edeltech and Shikun & Binui Energy for their continued trust and confidence. I'm pleased to also confirm that the Energean Power FPSO has sailed away and we look forward to delivering the first gas from Karish, which remains on track for Q3 this year."
East Hagit Power Plant Limited Partnership said in a statement: "This is another important step in the completion of the East Hagit acquisition, and a further stage of the joint process by Edeltech and Shikun & Binui Energy to increase competition and efficiency of the electricity market, for the benefit of Israeli consumers."
Energean did not say when exactly the FPSO sailed away from Singapore. The company has previously said that the FPSO journey to Israel would take around 35 days, with hook-up and pre-first gas commissioning then expected to take approximately three months.
According to WorldEnergyReports, the FPSO will be spread moored with 14 mooring lines in a water depth of 1,750 m. Lankhorst will supply 28 rope lengths totaling 43,400 m.
This will be the first FPSO ever to operate in the Eastern Mediterranean. The Energean Power will have a gas treatment capacity of 800 MMscf/day (8 BCM/per year) and a liquid storage capacity of 800,000 bbls.