Energean signs contract with Stena for drilling effort, offshore Israel

Energean plc has announced that its 100% subsidiary, Energean Israel Limited, has signed a contract with Stena Drilling Limited for its 2022 – 2023 growth drilling programme offshore Israel, which is expected to target the derisking of unrisked prospective recoverable resources of over 1 billion barrels of oil equivalent (“boe“).

The contract is for the drilling of three firm wells and two optional wells, with the first firm well expected to spud in 1Q 2022. The firm wells are all expected to be drilled during 2022, and consist of:

  • The Karish North development well, a key part of the Karish North development. The scope includes re-entry, sidetracking and completion of the previously drilled Karish North well and completion as a producer. The Karish North development will commercialise 33 Bcm (1.2 Tcf) of gas plus 31 mmbbls of liquids 2P reserves (a total of 243 mmboe) and is expected to deliver first gas in 2H 2023.
  • The Karish Main-04 appraisal well, which is expected to target further prospective volumes within the Karish Main Block, including the potential oil rim that was identified as part of the KM-03 development well drilling. Total unrisked recoverable volumes estimated to be targeted by the well are 166 mmboe.
  • The Athena exploration well, located in Block 12, is situated directly between the Karish and Tanin leases. Athena is estimated to contain unrisked recoverable prospective resource volumes of 20 Bcm (0.7 Tcf) of gas plus 4 mmbbls of liquids; of which the primary target is estimated to contain unrisked recoverable prospective resource volumes of 10 Bcm (0.4 Tcf) of gas plus 2 mmbbls of liquids 1 with a 70% geological chance of success. Success at Athena would be expected to significantly de-risk approximately 90 Bcm (2.5 Tcf) plus 19 mmbbls of remaining unrisked recoverable prospective resource volumes located within Block 12 and Tanin.

Two factors support the commercialisation of a Block 12 discovery. Firstly, Block 12 was a new licence award to Energean Israel Limited in 2018; produced volumes will therefore generate no royalty payments in respect of Energean Israel Limited’s original acquisition of the block. Secondly, the more proximate location of the potential development to the expected location of the Energean Power FPSO is also expected to reduce like-for-like development costs when compared with Tanin.

The drilling campaign will be undertaken using the Stena Icemax drillship, a state-of-the-art ice-class harsh environment dual-activity dynamically positioned drillship, capable of drilling in water depths of up to 10,000 ft.

Mathios Rigas, Chief Executive Officer of Energean, commented:

“We are delighted to be working with Stena again; and this five-well programme follows the three-well development drilling programme and 243 mmboe Karish North discovery, all successfully executed with Stena over 2019 and 2020.

Our five-well growth programme offshore Israel, commencing 1Q 2022, has the potential to double Energean plc’s reserve base with resource volumes that can be quickly, economically and safely monetized. Combined with first gas from our flagship Karish gas development project in mid-2022, the next 12-months are set to be truly transformational for Energean.”

 

EuroAsia taking on extra compatibility costs for Cyprus-Crete grid link

RAE, the Regulatory Authority for Energy, has updated details of a Cross Border Cost Allocation (CBCA) agreement concerning the Cyprus-Crete electricity grid interconnection plan, committing the project’s promoter, EuroAsia Interconnector, a consortium of Cypriot interests, to assume any additional compatibility costs that may arise during the development of this segment.

The development eliminates the prospect of action by EuroAsia against Greece following a decision by the Greek government, over a year ago, to detach the Crete-Athens segment from EuroAsia’s wider project, planned to link Greece, from Crete, with Cyprus and Israel.

As a result of the withdrawal, the Crete-Athens segment is now being independently developed by IPTO, Greece’s power grid operator.

Project disagreements between Greek and Cypriot officials have persisted for years but escalated into legal threats and action when, during his recent tenure as energy minister, Costis Hatzidakis decided to withdraw the Crete-Athens segment for independent development.

Following more recent negotiations, EuroAsia appears to have fully accepted the removal of the Athens-Crete segment from the wider project it is spearheading.

Israel, for some time now, has made clear its interest to link the Cyprus-Israel grid interconnection with the Crete-Athens section.

EastMed alliance broadens, eight countries express support

Support for the EastMed pipeline, planned to transport natural gas from offshore Levantine Basin gas reserves in the southeast Mediterranean to Greece and further into Europe, is growing in numbers with an initial Greek-Israeli-Cypriot alliance promoting this project now joined by five additional partners, Bulgaria, Romania, Hungary, Serbia and North Macedonia.

Energy ministers representing these eight countries forwarded a letter of support for the EastMed project to the European Commissioner for Energy Kadri Simson late last week, Greece’s energy and environment minister Kostas Skrekas has told local media.

The pipeline, to be developed by IGI Poseidon SA, a 50-50% joint venture between Greek gas utility DEPA and Italian gas utility Edison, is planned to cover a 1,470-km distance.

IGI Poseidon plans to develop EastMed all the way to Italy via Cyprus, Crete, the Peloponnese, mainland Greece and Epirus, the country’s northwestern flank.

This latest move, bringing the eight energy ministers together for the joint letter, was initiated by Skrekas, Greece’s energy minister, sources informed, following an initiative taken two months earlier by his Israeli counterpart Yuval Steinitz to organize a joint virtual conference involving ministers of all eight countries.

In their letter to Simson, the EU energy commissioner, the eight ministers highlight the importance of EastMed, noting the project promises to contribute to the wider region’s energy security and offer benefits to consumers as a result of increased competition and reduced natural gas price levels.

Regional gas interconnections, including the Greek-Bulgarian IGB, Bulgarian-Serbian IBS, Bulgarian-Romanian IBR and the Romanian-Hungarian IRH would be utilized to extend EastMed’s reach, the letter notes.

Greece and North Macedonia are currently planning a new gas pipeline interconnection whose Greek segment is being promoted by gas grid operator DESFA.

IPTO seeking active role in Cyprus, Israel, Egypt grid interconnections

Power grid operator IPTO is seeking an active role in the grid interconnections to link Greece with Cyprus and Israel, as well as Egypt, the company’s chief executive Manos Manousakis told yesterday’s Power and Gas Supply Forum, an online event staged by energypress.

Responding to questions as to whether IPTO is considering to acquire an equity stake in these projects, Manousakis noted that the operator’s role is to ensure the interoperability of the Athens-Crete and Crete-Cyprus power grid interconnections, a commitment made by the Greek government back in October, 2019.

The European Commission, engaged in ongoing exchange with IPTO in an effort to understand the level of maturity of these grid interconnection projects and, primarily, the interoperability of its systems, has mentioned that Brussels would be interested in the equity involvement of a European TSO, Manousakis informed.

Other priorities at IPTO include upgrading and expanding Greece’s grid interconnections with neighboring countries, which would boost cash flow in the domestic energy market through electricity exports, the chief executive noted.

A tender for the development of the local segment of a second transboundary grid interconnection linking Greece and Bulgaria, from Nea Santa, northeastern Greece, to Bulgaria’s Maritsa area in the south, will be completed this year, Manousakis informed.

New interconnections with Albania and North Macedonia are also being examined at present, he noted.

In addition, IPTO is close to signing a cooperation agreement with Italian operator TERNA for the development of a second Greek-Italian grid interconnection.

Furthermore, plans for an upgrade of the Greek-Turkish interconnection, a project linking the European and Turkish transmission systems, are also maturing, the IPTO chief informed.

 

 

Gas developments in the East Med

The international oil companies (IOCs) are still reeling under the impact of low oil and gas prices and massive losses and asset write-offs during 2020. ExxonMobil, under increasing pressure, is considering further spending cuts and even a shake-up of its board.

The path to full recovery will be slow and at the end of it, in 2-3 years, the IOCs will be different, placing more emphasis on clean energy and renewables.

In the meanwhile, around the East Med, Egypt is forging ahead. It has signed a new exploration agreement with Shell for an offshore block in the Red Sea. This is in addition to the 22 agreements signed during 2020 that included major IOCs such as ExxonMobil, Chevron, Shell, BP, Eni and Total. Moreover, EGPC and EGAS are planning to offer onshore and offshore exploration blocks for bidding in February.

This continuing activity led to the discovery of 47 oil and 15 natural gas fields in 2020, 13% more than in 2019, despite Covid-19.

Tareq El-Molla, Egypt’s petroleum minister, signaled earlier this month Egypt’s intention to expand its petrochemicals sector to take advantage of the country’s expanding hydrocarbon resources. Egypt has updated its petrochemical national plan until 2023 to meet the increasing prospects in this industry.

LNG exports

Egypt has also benefited from the recent increase in LNG prices, resuming exports from its liquefaction plant at Idku, with most exports going to China, India and Turkey. The country is also ready to resume exports from its second liquefaction plant at Damietta starting end February. This has been lying idle since 2012 due to disputes that have now been resolved.

LNG exports will mainly utilize surplus gas from the Zohr gasfield and possibly imports from Israel, should prices allow it.

In fact, the resumption of LNG exports from Idku relieved some of the pressure on Egypt’s gas market, which is in oversupply partly due to impact of the pandemic, but also due to falling gas demand in Egypt’s power sector and growth in renewable energy.

El-Molla said that Egypt is planning a revival of its LNG exports. But this depends greatly on what happens to global markets and prices.

The International Energy Agency (IEA) said that the Asian LNG demand and price spike in January was a short-term phenomenon and it is not an indicator that global demand will rebound in 2021. The IEA expects only a small recovery in global gas demand this year, after the decline in 2020, partly due to the pandemic. But given ongoing concerns over the pandemic, the rate of gas demand growth will remain uncertain. The IEA said the longer-term future of LNG markets remains challenging.

Gas from Israel

Chevron – having acquired Noble Energy and its interests in the region last year – with Delek and their partners in Israel’s Leviathan and Tamar gasfields, signed an agreement to invest $235million in a new subsea pipeline, expanding existing facilities. According to an announcement by Delek, the pipeline will connect facilities at Israeli city Ashod to the EMG pipeline at Ashkelon, enabling Chevron and its partners to increase gas exports to Egypt to as much as 7billion cubic meters annually (bcm/yr).

The partners signed agreements last year to export as much as 85bcm/yr gas to Egypt over a 15 year period. Gas supplies from Israel to Egypt started in January last year.

It is not clear at this stage if new agreements will be reached to fully utilize the increased export capacity from Israel to Egypt, but given Egypt’s gas oversupply this may not be likely.

These developments, though, show the vulnerability of Cyprus and the weakness of relying on trilateral alliances with Egypt and Israel for its gas exports.

EastMed gas pipeline

This is being kept alive by regional politicians. Only this week, Greece, Cyprus, Israel, Bulgaria, Hungary and Serbia confirmed their support for the EastMed gas pipeline.

While such developments are good politically, bringing like-minded countries around the East Med closer together, they are not sufficient to advance the project. This requires private investment and buyers of the gas in Europe. None of these is forthcoming, because the project is not commercially viable. By the time the gas arrives in Europe it will be too expensive to compete with existing, much cheaper, supplies.

Europe is also moving away from gas and from new gas pipeline projects. Catharina Sikow Magny, Director DG Energy European Commission (EC), covered this at the European Gas Virtual conference on 28 January. Answering the question how much natural gas will the EU need in the future, she said ZERO. She was emphatic that with the EU committed to net zero emissions by 2050, by then there will be zero unabated gas consumed in Europe. In addition, with the EU having increased the emissions reduction target from 40% to 55% by 2030, the use of gas in Europe will be decreasing in order to meet the 2030 and 2050 climate targets. She said that ongoing natural gas projects are expected to be completed by 2022 – with no more needed after that.

With exports to global markets becoming increasingly difficult, there are other regional options to make use of the gas discovered so far around the East Med, including power generation in support of intermittent renewables and petrochemicals, as Egypt is doing. The newly constituted East Med Gas Forum (EMGF) should place these at the heart of its agenda.

What about Cyprus?

Hydrocarbon exploration activities around Cyprus are at a standstill, partly due to the continuing impact of Covid-19, but also due to the dire state of the IOCs and the challenges being faced by the natural gas industry in general.

This lack of activity in resuming offshore exploration may be a blessing, taking the heat off hydrocarbons, while priorities shift to discussions to resolve the Cyprus problem and the Greece-Turkey maritime disputes.

Dr Charles Ellinas, @CharlesEllinas

Senior Fellow

Global Energy Center

Atlantic Council

3 February, 2021

 

Greece, Israel eyeing broader alliance for Balkans, central Europe

The Greek-Israeli energy alliance is broadening its scope by aiming for the establishment of a Greek gateway to facilitate Israeli gas supply to the Balkan region and, by extension, central Europe.

This objective, part of strong diplomatic relations between the two countries in energy, was confirmed during a recent virtual meeting between Greece’s newly appointed energy minister Kostas Skrekas and his Israeli counterpart Yuval Steinitz.

Their bilateral talks will be followed up by broader meeting today to involve the energy ministers of Greece, Israel, Cyprus, Serbia, Bulgaria, Romania, North Macedonia and Hungary.

The participating officials will seek to lay the foundations for a closer energy alliance that would facilitate distribution from Israel’s Leviathan gas field via alternate routes – the Alexandroupoli FSRU and the IGP – to soon be offered by Greece.

The aforementioned Balkan and central European countries are extremely keen on securing alternative supply routes, diplomatic sources informed.

Much work is needed by Israel and Greece to establish energy alliances with Balkan countries, but a first step will seemingly be taken today.

Prinos field threatened by poor results, decline projection

Operations at the Prinos field, Greece’s only producing oil field, in the country’s offshore north, are in great danger of being disrupted following poor production figures in 2020 and a further decline predicted for 2021, a wider company update just delivered by Energean Oil & Gas, the field’s license holder, has suggested.

In 2020, production at the oil field reached just 1,800 barrels per day, while its inferior-quality output was sold at a discount price, between 7 to 8 dollars below Brent levels.

This level of output represents less than 4 percent of Energean’s overall production, which, last year, reached 48,000 barrels – mostly natural gas.

Output at the Prinos field is projected to drop below 1,500 bpd in 2021 as, even if a rescue plan for the facility is approved, related investments needed at the facility will take time to complete.

The rescue plan, announced last June by Energean and dubbed Green Prinos, envisions an adjustment for eco-friendly operations through a series of investments worth 75 million euros.

Energean’s administration, in its company update to analysts, expressed hope that a solution can be found in the first quarter of 2021 for its rescue plan, submitted to the Greek government, which then forwarded the plan to the European Commission.

The rescue plan has remained stuck at the European Directorate for Competition, whose approval is required.

Energean is considering the development of a carbon capture and storage project at its Prinos field, which would be the first in Greece, promising new life for the project, along with the support of investments at field E, whose development depends on the outcome of a financing bid, company officials informed.

Overall, the news for the Prinos field is not good. Losses incurred by this unit since September, 2019, when its crisis began before being further aggravated by the pandemic, have exceeded 100 million euros.

This loss, however, has not affected the overall financial results of Energean, generating significant earnings in Egypt, primarily. Israel, too, could become a major source of earnings for the company as of next year.

Energean plc takes Final Investment Decision on Karish North development

Energean plc has taken Final Investment Decision (FID) on the Karish North gas development, offshore Israel, 21-months after the announcement of the discovery, the company has announced in a statement.

In November 2020, DeGolyer and MacNaughton issued an independent Competent Persons Report that, inter alia, certified 2P reserves of 32 Bcm of gas plus 34 million barrels of liquids
(approximately 241 million barrels of oil equivalent in aggregate) in Karish North as at 30 June 2020.

The discovery will be commercialised via a low-cost tie-back to the Energean Power FPSO, which will be just 5.4km away.

Production from the first well at Karish North is expected to be up
to 300 mmscf/d (approximately 3 Bcm/yr) and first production is expected during 2H 2023.

Initial capital expenditure in the project is expected to be approximately $150 million, or $0.6/boe; and Energean estimates that the project will deliver IRRs in excess of 40%.

On 13 January 2020, Energean signed an 18-month, $700 million term loan facility agreement with J.P. Morgan AG and Morgan Stanley Senior Funding, Inc., the primary uses of
which will be:

• Accelerating the development of Karish North, enabling the capital expenditure on the project to be undertaken in advance of first gas from Karish Main. Following first gas from Karish North, the overall Karish project well stock will be able to produce well in excess of
the full 8 Bcm/yr capacity of the FPSO, retaining operational redundancy in the well stock therefore further enhancing overall project reliability.

• Funding the $175 million up-front consideration for the acquisition of the minority interest in Energean Israel Limited, as announced on 30 December 2020, which becomes payable on transaction close, expected 1Q 2021. Energean views the acquisition, for between $380 million and $405 million in total, as highly value-accretive, with very attractive transaction metrics.

Additional uses of the loan are:

• Funding approximately $100 million of capital expenditure required to install the second oil train and second riser on the Energean Power FPSO, which will increase the Energean Power FPSO liquids production capacity to approximately 40 kbopd ( from 21 kbopd) and allow maximum gas production of 800 mmscf/d (approximately 8 Bcm/yr, from 6.5 Bcm/yr). Both the oil train and the second riser are expected to become operational during 2022.

• The 2022 offshore Israel exploration and appraisal drilling programme in early 2022, with up to five wells including:

  • Appraisal of the potential oil rim that was identified as part of the Karish development drilling campaign plus exploration of further prospective gas and liquids volumes within the Karish lease.
  • Block 12, which is located between the Karish and Tanin leases, and is estimated to contain gross prospective recoverable resources in excess of 108 Bcm (3.8 Tcf)
    according to the D&M CPR, with the primary targets having geological chances of success ranging between 63% and 79%. The first well is expected to target the 20
    Bcm (0.7 Tcf) Athena prospect, for which the primary target (11 Bcm /0.4 Tcf) has a 70% geological chance of success. Success at Athena would significantly de-risk
    the remaining 88 Bcm (3.1 Tcf) of prospective resources in the block. Any discovery in that block would be prioritised over the development of Tanin due to (i) lower capital expenditure investment (as compared to Tanin) and (ii) the absence of any seller royalties, unlike the Karish and Tanin leases as Block 12 was not part of the original Karish-Tanin acquisition.
  • Additional prospects assessed to contain 102 Bcm (3.6 Tcf) of gross recoverable prospective resources, based on management estimates, in Energean Israel’s remaining exploration blocks.
    • Whilst total pre-production capex guidance for the Karish Main project remains at $1.7 billion plus the $140 million of deferred payments to TechnipFMC, the balance of the Loan will provide further financial flexibility for Energean Israel Limited.
    The Loan will only be drawn to the extent necessitated and drawn amounts will attract a margin of 5.75%, which steps up by 0.25% every three months, with a maximum of 7.00%. The Loan has been sized to cover the cost of associated fees and interest. Energean maintains its target to retain its medium-term net debt / EBITDAX ratio below 2.0x                                                                                                                                                    On 13 January 2021, Energean also agreed with the existing lenders of its $1.45 billion project finance facility to extend the maturity by nine months, from December 2021 to September 2022.
    Combined with the above Loan, the extension to the maturity date of the project finance facility provides Energean the necessary time and flexibility to optimise its long-term capital structure.
    This is expected to take place in 2021, depending on market conditions.                                                                                                                                                                                                    Mathios Rigas, CEO of Energean, commented: “I am delighted that we have taken Final Investment on Karish North, proving the value of the Energean Power FPSO as a quick and low-cost commercialisation route for our assets in Israel.
    We are also increasing the liquid processing capacity of our FPSO to process the additional volumes we discovered for minimal incremental cost.
    The new term loan and the extension of our project finance facility are a further testament of the confidence of the financial markets in Energean and I want to thank all the institutions for their support. We remain committed to optimising our capital structure to ensure that we maximise total shareholder returns whilst implementing our growth ambitions in Israel and the East Med. We remain on track to achieve our goal of delivering meaningful free cash flows that will support the payment of a sustainable dividend whilst also moving towards our stated target to achieve
    net zero emissions.”

Energean Israeli exploration to focus on gas deposits estimated at 62 bcm

Energean Oil & Gas will now focus its Israeli exploration activities on the Karish, Tanin and Block 12 fields in an effort to boost its certified natural gas and liquid hydrocarbon reserves.

Following yesterday’s announcements by the Greek company, according to which an independent Competent Persons Report by DeGolyer and MacNaughton certifies 98.2 Bcm (3.5 Tcf) of gas and 99.6 million barrels of liquids (MMbbls) at the Karish, Karish North and Tanin offshore fields of Israel, the exploration program will restart in 2022 for a boost of reserves through the Karish, Tanin and Block 12 licenses. Energean plans to stage its next drilling efforts in two years.

Estimates indicate 62 billion cubic meters of natural gas and 33.4 million barrels of liquid hydrocarbons, representing 431 million barrels of oil equivalent.

Energean will also focus on Block 12 targets – named after the Greek gods Zeus, Hera, Apollo, Athena and Hestia – estimated to carry prospective gas reserves measuring 32.7 billion cubic meters, more than half the overall 62 billion cubic meters.

Discovery of these prospective reserves is expected to further reinforce the Greek company’s standing on the southeast Mediterranean energy map.

EuroAsia project moving again, Egypt present with EuroAfrica

Development of the wider region’s two major electricity grid interconnections, the EuroAsia Interconnector, to link Greece, from Crete, with Cyprus and Israel, and EuroAfrica Interconnector, a complementary project to link Cyprus with the African continent via Egypt, was discussed at a meeting in Nicosia yesterday between Greece’s energy minister Costis Hatzidakis and his Cypriot counterpart Natasa Pilides.

Progress at EuroAsia Interconnector, whose launch is scheduled for late in 2023, was held back by a Greek-Cypriot dispute prompted by Greek power grid operator IPTO’s withdrawal of the wider project’s Crete-Athens segment from EuroAsia Interconnector, a consortium of Cypriot interests.

The Crete-Athens segment is now being developed as a national project by IPTO and subsidiary Ariadne Interconnection.

EuroAsia Interconnector and EuroAfrica Interconnector promise to develop Cyprus into an electricity hub. A 310-km cable from Israel and a 498-km line from Egypt will converge at coastal Kofinou, in Cyprus’ south. From this hub, an 898-km cable is planned to link Cyprus with Crete before reaching Athens.

At yesterday’s meeting, the Greek and Cypriot energy ministers primarily focused on EuroAsia Interconnector, the Crete-Cyprus-Israel project, at a more mature stage.

Budgeted at 2.5 billion euros, this project, regarded as an EU Project of Common Interest, will promote regional energy security and further RES penetration in all three participating countries, Hatzidakis noted. The EU, it is estimated, will need to contribute at least half the project’s value.

Cyprus is the only EU member state without electricity grid interconnections.

Germany’s Siemens was awarded a procurement contract last May for EuroAsia Interconnector’s HVDC converter stations, budgeted at 623 million euros.

EuroAsia Interconnector was initially planned to offer 2 GW but this capacity has been halved, for the time being, as the other 1 GW will be used for the Crete-Athens grid interconnection.

EuroAsia Interconnector’s Israel-Cyprus segment is budgeted at 900 million euros while the cost of the bigger Cyprus-Crete section is estimated between 1.6 and 1.8 billion euros.

 

Energean Israel signs deals for sale of extra 1.4 bcm/yr from Karish project

Energean Israel (Energean, 70%) has signed two new Gas Sales and Purchase Agreements, which, combined, represent gas quantities of up to 1.4 bcm/yr and increase total firm contracted gas sales from its flagship Karish project to approximately 7.0 bcm/yr on plateau, Energean plc has announced in a statement.

The new agreements represent contracted revenues of more than $2.5 billion over the life of the contracts, but require no further capital investment beyond Karish North, upon which Energean Israel expects to take Final Investment Decision later this year. The GSPAs have been signed at levels that are aligned with the other large, long-term contracts within Energean’s portfolio and are only subject to buyers’ lenders’ consent

The majority of the quantities are represented by a GSPA to supply gas to the Ramat Hovav Power Plant Limited Partnership (“RH Partnership”), a partnership between the Edeltech Group and Shikun & Binui. RH Partnership was the winning bidder in the Israel Electric Corporation (“IEC”) Ramat Hovav tender process, the second IEC power plant in a series of five to be privatised. The GSPA is for a term of up to 20 years and contains provisions regarding floor pricing for the main plateau period and exclusivity. The annual contract quantity (“ACQ”) reduces after the first seven years following first gas from Karish.

The remainder of the quantities are represented by a second new GSPA that has been signed with an affiliate of the RH Partnership for the supply of gas for other existing power stations. Gas supply will commence following first gas from Karish, achieving the plateau rate from January 2024. The contract term is for up to 15 years and the GSPA contains provisions regarding floor pricing for the main plateau period and take-or-pay.

Energean Israel (Energean 70%) now has firm GSPAs in place for the supply of approximately 7.0 bcm/yr on plateau. Having secured sufficient resources to fill the FPSO for a number of years, Energean’s near-term strategy is to secure the necessary offtake to fill the remaining 1.0 bcm/yr of spare capacity in the 8 bcm/yr Energean Power FPSO. Energean is assessing several opportunities in both the Israeli domestic market and key export markets in order to meet this target, alongside reviewing further growth opportunities across the nine exploration blocks that it holds in Israel to further expand its presence in the Eastern Mediterranean.

Mathios Rigas, Energean’s CEO, commented: “We are delighted to have signed these additional gas sales agreements, which increase firm gas sales to 7 bcm/yr on plateau from our flagship Karish gas project, which is on track to deliver first gas in 2H 2021 and I want to thank Edeltech and Shikun & Binui for their continued trust.

We remain committed to continue bringing competition and security of supply to the Israeli gas market even after we fill the Karish FPSO to its maximum 8 bcm/yr capacity.

The new contracts we signed today further strengthen our secured revenues stream, which is well-insulated against future commodity price fluctuations, and provide cash flows that will support our strategic goal of paying a sustainable dividend to our shareholders.”

 

US investments in Greek RES sector rising, LNG imports up

New US investments in Greece’s RES sector are on the rise, the energy ministry has stressed following a meeting yesterday between Greek energy minister Costis Hatzidakis and the U.S. Ambassador to Greece, Geoffrey Pyatt, for a discussion on major energy project plans in the wider region and the related American investment activity.

U.S. companies such as ONEX, Black Summit, with support from DFC (International Development Finance Corporation), Quantum Energy Partners, National Energy, General Electric, Fortress Investment Group, Blink and Tesla are all currently pursuing investments in the Greek market.

Hatzidakis, the energy minister, expressed satisfaction over the level of foreign investments in Greece, noting U.S. participation has significantly increased, especially in the energy sector.

Last month, 547 Energy, an American renewable energy venture backed by Quantum Energy Partners, participated for a third time in a row in a RES auction staged by RAE, the Regulatory Authority for Energy, adding 107 MW in wind energy capacity to its Greek portfolio for a current tally of eight RES projects and 390 MW, the energy ministry noted.

National Energy is drawing American funds to develop wind and solar energy projects in Greece with a total capacity of 270 MW, the statement added.

Also, the energy ministry noted, General Electric has supplied equipment for a wind energy farm in Fokida, west of Athens, a project being partially financed by the Fortress Investment Group; Blink recently began an investment plan in the electromobility sector, for rechargers and other equipment; while Tesla, a producer, amongst other things, of electric vehicles, recently announced a plan to expand its operations into Greece.

During their meeting, Hatzidakis and Pyatt also discussed the partnership between Greece, Cyprus and Israel, plus the U.S.

The progress of work at the Greek-Bulgarian IGB gas pipeline, whose geostrategic importance was stressed by the Greek minister, was also addressed. A closer association with Bulgarian contractors is being sought for the project’s punctual delivery.

Work on the Alexandroupoli FSRU in northeastern Greece is progressing at a satisfactory pace, the two officials agreed, noting the project will have a positive impact on geostrategic and energy matters.

The U.S. supplied nearly half of the 2,651,903 cubic meters of LNG imported into Greece in the first half of 2020, almost quadruple the amount supplied by America to Greece during the equivalent period a year earlier.

Rescue talks for Prinos, Greece’s only producing field, making progress

Talks between Energean Oil & Gas and officials at the energy and economy ministries for a solution to rescue offshore Prinos, Greece’s only producing field in the north, are making progress, sources have informed.

Heightened Turkish provocations in the Aegean Sea over the past few days – the neighboring country sent a survey vessel into Greece’s EEZ – and greater US presence in the wider southeast Mediterranean region, are two developments that have injected further urgency into the Prinos field rescue talks.

The east Mediterranean is at the core of geopolitical developments that promise to create new political and energy sector conditions.

US oil corporation Chevron, America’s second-biggest energy group, has joined fellow American upstream giant ExxonMobil in the east Mediterranean with a five billion-dollar acquisition of Noble Energy.

This takeover by the California-based buyer adds to the Chevron portfolio the gigantic Leviathan gas field in Israel’s EEZ, as well as the Aphrodite gas field, situated within the Cypriot EEZ and estimated to hold 4.5 trillion cubic feet.

It also offers Chevron prospective roles in the East Med pipeline, to supply Europe via the Leviathan field, and Egypt’s LNG infrastructure, all elevating the petroleum group into a dominant regional player.

Israel and Cyprus recently ratified the East Med agreement, as has Greece, while Italy appears to be examining the prospect.

In another regional development, the Total-ENI-ELPE consortium is preparing to conduct seismic surveys at licenses south and southwest of Crete, and an environmental study southeast of Crete has been approved by Greek authorities. Also, oil majors with interests in Cyprus’ EEZ have planned a series of drilling operations for 2021.

Meanwhile, Turkey, trespassing into both Greek and Cypriot EEZ waters, consistently cites a memorandum recently signed with Libya as support for its actions, as well as its refusal to sign the UN’s International Law of the Sea treaty, strongly disagreeing with an article that gives EEZ and continental shelf rights to island areas.

Greek government officials are well aware that closure of the Prinos field amid such precarious conditions would lead to major consequences, not just economic and social, as would be the case under normal conditions, but also geopolitical.

Turkey tensions will not be escalated, ‘aim achieved’

Turkey will not continue intensifying its provocations in the East Mediterranean as the neighboring country has already achieved its main goal, a State Department declaration noting that the country is performing hydrocarbon exploration activities in disputed territory, Dr Konstantinos Nikolaou, a seasoned petroleum geologist and energy economist, supports.

Turkey’s provocations over the past few days – the country sent a seismic survey vessel into Greek EEZ waters for further exploration work following such initiatives in the past – represent part of a carefully planned strategy whose aim is to end Turkey’s East Mediterranean isolation of recent years and put the country back in the frame of the region’s hydrocarbon developments, experts believe.

Turkey has refused to sign the UN’s International Law of the Sea treaty, strongly disagreeing with Article 121, giving EEZ and continental shelf rights to island areas.

Instead, the country has followed its own rules, adjusting them as it pleases, to avoid giving any rights to island areas.

Besides seeking to reinforce the country’s position that rejects any EEZ rights for islands, the latest Turkish moves also aim to cancel EEZ agreements signed by Cyprus with Egypt, Israel and Lebanon.

Turkey has unsuccessfully sought to sign an EEZ agreement with Egypt, during Muslim Brotherhood times.

Dr. Nikolaou predicts that there will be no Turkish movement south of Crete as the transfer of an area by Libya, Turkey’s regional partner, would be required. The area of Benghazi is not controlled by Fayez al-Sarraj, the head of Libya’s UN-recognized government, but by renegade commander Khalifa Haftar.

Ultimately, the Turkish strategy in the wider region is aiming for co-exploitation of hydrocarbon deposits that may be discovered.

Chevron buys Noble Energy, US striving for regional control

Energy corporation Chevron has become the latest American giant, following ExxonMobil, to establish itself in the east Mediterranean upstream market following a five billion-dollar acquisition of Noble Energy, a deal that adds the gigantic Leviathan gas field in Israel’s EEZ to the California-based buyer’s portfolio and elevates the petroleum group into a dominant regional player.

This latest development highlights America’s strategy for the region, aiming to establish US control of production at new gas fields as well as supply to Europe, analysts noted.

Chevron’s acquisition of Noble Energy, highlighting the upstream industry’s elevated interest in the east Mediterranean, comes amid increased regional tension prompted by Turkish provocation. Greece’s neighbor has just sent a seismic survey vessel into Greek waters for hydrocarbon exploration activities.

Besides the Leviathan gas field’s recoverable reserves, estimated at 22 trillion cubic feet, the Chevron portfolio now also takes on Israel’s Tamar field, whose gas reserves are estimated at 7.1 trillion cubic feet.

Noble has proved reserves of 2.05 billion barrels of oil and gas to add to Chevron’s reported 11.4 billion.

Chevron, whose earnings in 2019 reached 139.9 billion euros, also adds to its assets, totaling 237.4 billion dollars, the Aphrodite gas field, situated within the Cypriot EEZ and estimated to hold 4.5 trillion cubic feet. Noble Energy is among this field’s operators.

Chevron’s control of the Leviathan gas field also secures American influence over the EastMed gas pipeline planned by Israel, Cyprus and Greece.

Fellow American petroleum giant ExxonMobil recently discovered, within the Cypriot EEZ, the Glafkos gas field, estimated to carry between 5 and 8 trillion cubic feet of gas. ExxonMobil has also taken on major licenses in Egypt and is also a member of a consortium formed with France’s Total and Hellenic Petroleum (ELPE) for licenses at offshore blocks west and southwest of Crete.

 

Cyprus wants unchanged cost agreement for link with Crete

Though a new application submitted by EuroAsia Interconnector, a consortium of Cypriot interests, to the EU’s Connecting Europe Facility for funding support concerning an electricity grid interconnection project to link the Greek and Cypriot systems has yet to be examined or reciprocated by the European Commission, Greece and Cyprus have already begun talks on how to divide the remainder of the project’s costs not covered by the CEF.

The Cypriot side, which took the initiative for these talks, appears determined to ensure that Greece will stick to its share of the cost under the terms agreed to when the project also included the Athens-Crete link as part of a wider plan to interconnect the Greek, Cypriot and Israeli systems.

EuroAsia Interconnector head the wider Greek-Cypriot-Israeli plan. Greek power grid operator IPTO withdrew the Athens-Crete segment and is now working on it as a national project. IPTO is aiming for swifter progress on this section, urgently needed to resolve Crete’s pressing energy sufficiency issues.

Cyprus’ Regulatory Authority for Energy, RAEK, has forwarded to its Greek counterpart RAE a text presenting its cost-related views. RAEK wants to ensure that a Cross Border Cost Allocation agreement signed by the two sides late in 2017 for the Greek-Cypriot link, running from Crete to Cyprus, remains valid, despite Greece’s withdrawal of the Athens-Crete section.

According to the CBCA agreement, Cyprus will take on 63 percent of the cost of the Crete-Cyprus link and Greece will be responsible for the other 37 percent, under the condition that 50 percent of the total cost will be covered by EU funds, through the CEF.

The Crete-Cyprus interconnection is budgeted at 1.5 billion euros, meaning Greece’s share will be approximately 280 million euros.

This amount will be incorporated into IPTO’s accounts and need to be recovered through network surcharges included in consumer electricity bills, seen as a delicate matter by the Greek government.

Greek authorities have yet to respond to RAEK’s initiative as they await news from the European Commission on the CEF request.

Poseidon overland section plan kept alive, PCI status sought

IGI Poseidon, a 50-50 joint venture between Greek gas utility DEPA and Italian energy operator Edison, is keeping alive the development prospects of an overland Greek segment, across northern Greece, for its Poseidon pipeline, to cross the Ionian Sea for a Greek-Italian link.

DEPA and Edison have submitted an application to the European Commission for PCI status concerning the overland section of Poseidon, enabling EU funding support, sources informed.

The Poseidon pipeline’s onshore segment, planned to stretch 760 km across northern Greece, from Kipous in the northeast, to Florovouni-Thesprotia, in the country’s northwest, before crossing the Ionian Sea all the way to Otranto, on Italy’s east coast, is considered an extension of the EastMed gas pipeline plan to link Greece, Cyprus and Israel.

Poseidon’s onshore segment could be used to transport natural gas from east Mediterranean gas reserves to Balkan markets.

The Poseidon pipeline’s overland section can also be expected to be linked to the Greek-Bulgarian IGB gas pipeline, another project involving IGI Poseidon.

The Greek-Italian Poseidon pipeline has been incorporated into a trilateral agreement signed by Greece, Cyprus and Israel for the EastMed pipeline. This pact was ratified in Greek Parliament last month.

Greece, Cyprus and Israel recognize the overland section of the Poseidon pipeline as a project of national significance.

Capacity of the Poseidon pipeline has been increased to 15 bcm from an original capacity of 8 bcm, while a further capacity boost to 20 bcm is planned.

 

Greece, Cyprus, Israel, with US, plan for EastMed meeting next month

The energy ministers of Greece, Cyprus and Israel plan to stage a trilateral meeting next month, with US involvement, for talks on the prospective EastMed gas pipeline, to transport gas from Israeli and Cypriot fields to Europe via Greece and Italy.

It remains uknown if Francis Fanon, the US Assistant Secretary of State and head of the country’s energy portfolio, will participate at this meeting.

It also remains unclear if participants will stage a virtual conference as a result of pandemic measures or meet in person.

The Greek, Cypriot and US governments were waiting for the new Israeli government to be sworn in before shaping plans for the EastMed meeting, to also serve as a second energy conference between the four nations following an inaugural session in Athens last August.

Yuval Steinitz has been reappointed at Israel’s top energy post, meaning the line-up of last year’s session between the Greek, Cypriot and Israeli energy ministers can be repeated at the next meeting. Greece’s Costis Hatzidakis and Cyprus’ Giorgos Lakkotrypis are still at their posts.

The Greek, Cypriot and Israeli government officials are expected to reaffirm the commitment of their respective countries to the EastMed gas pipeline, as well as commitment to cooperation for regional peace and prosperity, sources said.

Also, the energy ministers of Greece, Cyprus and Israel, along with the session’s US representative, will seek to send Turkey a unified message on its provocative actions against Greece as well as increased aggression in the wider southeast Mediterranean region.

A trilateral EastMed gas pipeline agreement was approved in Greek Parliament last January.

Israel could soon reach a decision on the financing of some of the studies needed for the international pipeline’s link to the national grid.

Also, IGI Poseidon, a consortium comprising Greek gas utility DEPA and Italy’s Edison, is moving ahead with studies for the pipeline’s underwater and overland route between Greece and Italy. IGI Poseidon wants to make an investment decision on this project within the next two years. Meanwhile, Cyprus is making progress on licensing matters.

Committee to oversee Greece, Cyprus, Israel grid link compatibility

Greek power grid operator IPTO, its Cypriot counterpart, DSMK, and project partners have been authorized by the energy ministries of the two countries to assemble a special committee tasked with ensuring technical compatibility between the prospective Athens-Crete grid interconnection and the planned Cypriot and Israeli links.

The Athens-Crete grid interconnection, work on which is set to begin, will be developed by IPTO subsidiary Ariadne Interconnector, following the Greek grid operator’s break away from Cyprus’ EuroAsia Interconnector, originally formed to oversee the entire interconnection project, from Greece to Israel, but now handling its Cyprus and Israel segments.

The Greek and Cypriot energy ministries have asked IPTO, DSKK, Ariadne Interconnector and EuroAsia Interconnector to assemble the special committee within the next fortnight.

Greece’s energy ministry is determined to contribute to all efforts resolving any technical issues for the wider Greek-Cypriot-Israeli interconnection but development of the Athens-Crete section, nationally significant as it promises to prevent energy shortages on Crete, remains the ministry’s main concern at this stage, sources informed.

The Greek government is providing strong political support to the Crete-Cyprus and Cyprus-Israel segments, the energy ministry’s secretary-general Alexandra Sdoukou has pointed out, noting Cyprus’ grid interconnection with the rest of the EU promises to help the country achieve RES objectives set for 2030.

Energean Power FPSO hull sails away from China

Energean Oil & Gas’ Enegean Power FPSO hull sailed away from the COSCO yard in China today and will now be towed to the Sembcorp Marine Admiralty Yard in Singapore, where the topsides will be integrated, before the completed FPSO is towed to the Karish field in Israel for installation and hook-up, the company has announced in a statement.

The sailaway of the hull from China represents the achievement of a key milestone in the Karish project timetable, the statement noted.

During the construction of the hull in China, more than 5 million man hours free of LTI’s have been completed. Including the construction of the topsides in Singapore and other relevant works, more than 10 million man hours free of LTI’s have been completed so far in the construction of the Energean Power FPSO.

Energean has also successfully completed the drilling of the three development wells in the Karish Main field and is confident that the three development wells can produce at combined rates of 800 mmscf/d, which is sufficient to fill the capacity of the FPSO (8 BCM per year), the company statement added.

On another important development, the Karish gas sales pipeline (30 & 24 inch) was shipped from Greece last week and offloaded successfully at Limassol Port, Cyprus.

The pipeline will be loaded from the Limassol port on PSVs and from them on the Karish Field pipe-laying vessel Solitaire.

The gas sales pipeline of approximately 90 km will transport gas from the Enegean Power FPSO to an onshore valve station at the Dor landfall in Israel.

First gas on the Karish project is on track for H1 2021.

Update on the Edison E&P acquisition

Also, Energean and Edison have entered into a formal amendment to the Sale and Pusrchase Agreement on 2 April 2020, in which:

  • the Algerian Assets shall be excluded from the scope of the acquisition of Edison E&P;
  • in recognition of the exclusion of the Algerian Assets, there will be an adjustment to the total consideration of the acquisition of approximately $150 million (as at the lock-box date of 1st January 2019).

Energean is working to complete the acquisition of Edison E&P as soon as is possible in 2020, subject to the approval of its shareholders and the other relevant governments, the company statement noted. Thereafter, completion of Energean’s agreement for the sale of Edison E&P’s UK and Norwegian subsidiaries to Neptune for a consideration of $250 Million plus contingent consideration of up to $30 million (as previously announced), will be completed as soon as is reasonably practicable, it added.

 

 

Greece looks to build on Italian East Med interest at Cairo event

Energy minister Costis Hatzidakis will be looking to build on yesterday’s interest expressed by Greek gas grid operator DESFA’s main shareholders – Snam, Enagas and Fluxys – in the planned East Med gas pipeline project, especially Italy’s Snam, when he meets with regional counterparts at the Eastern Mediterranean Gas Forum in Cairo, an event encouraging collaboration on gas trade in the region.

The energy ministers of Greece, Cyprus, Egypt, Israel, Italy, Jordan and the Palestinian Authority are scheduled to participate at the Cairo event.

Snam chief executive Marco Alvera expressed particular interest in the East Med gas pipeline at a meeting yesterday involving Greek Prime Minister Kyriakos Mitsotakis and the chiefs of the Italian company’s DESFA partners, Enagas and Fluxys.

Snam’s interest in the prospective East Med gas pipeline, to carry natural gas from Cypriot and Israeli fields to the EU via Italy, follows that of Energean and represents further investor confidence in the sustainability of the pipeline as it possesses commercial appeal for gas producers in the east Mediterranean as well as gas sales.

Participants at the Eastern Mediterranean Gas Forum are hoping the event is upgraded into a transboundary organization for gas cooperation. If an agreement on a forum charter is achieved, a signing ceremony will take place in Cairo tomorrow.

Besides participating at the forum, Hatzidakis, Greece’s energy minister, has also lined up meetings with his Cypriot, Israeli and Egyptian counterparts, Giorgos Lakkotrypis, Yuval Steinitz and Tarek el-Molla, respectively, for talks on the next steps needed to develop the East Med pipeline.

In addition, Hatzidakis will discuss prospective electricity grid interconnections between Greece and Egypt and also meet with Italy’s economic development minister Stefano Patuanelli, responsible for the country’s energy portfolio, who recently forwarded a letter of support for the East Med project to his Greek counterpart.

East Med pipeline to upgrade geostrategic role of participants

The EastMed Pipeline Agreement, a trilateral deal signed by the energy ministers of Greece, Cyprus and Israel in Athens yesterday with the leaders of all three countries in attendance, includes provisions for measures to protect and safeguard the pipeline project, sources have informed.

Other details in the agreement, fundamental to the region’s energy developments, include a regulatory and licensing framework facilitating the project’s development, common tax rules, as well as terms enabling the entry of new members and transmission of additional natural gas quantities from existing or new gas fields, including south of Crete, should any new deposits be discovered in the region.

The agreement upgrades the geostrategic roles of Greece and Cyprus and is a crowning achievement for the three-way cooperation established between the two countries and Israel, noted Greek Prime Minister Kyriakos Mitsotakis.

The 2,000-km pipeline is planned to carry between 10 to 20 billion cubic meters of natural gas to Europe via the three countries and Italy.

Addressing the heightened Turkish provocation of late, the Greek leader noted that the pipeline does not pose a threat for any side, adding regional cooperation is open for all provided rules of good neighborliness and international law are respected.

Following up on the recent commencement of production at the Leviathan gas field off the coast of Israel, the EastMed Pipeline Agreement establishes Israel as a key energy player in the region, stressed Israeli Prime Minister Benjamin Netanyahu.

The project promises to offer major collective benefit for the three countries involved as well as the wider region, noted Cypriot President Nicos Anastasiades.

Earlier yesterday, Greek gas utility DEPA and Energean Oil & Gas, active in the wider Mediterranean region, signed a Letter of Intent at the energy ministry through which DEPA will be able to purchase natural gas quantities from Energean, extracting at Israeli gas field licenses.

DEPA, in a company announcement, described the Letter of Intent as a major first step for the East Med project’s commercial viability.

Trilateral East Med agreement set to be signed in Athens today

The energy ministers of Greece, Cyprus and Israel are set to sign a trilateral agreement in Athens this afternoon for the development of East Med, a natural gas pipeline to carry gas to Europe via the three countries and Italy.

The pipeline, planned to measure 2,000 km and offer a capacity ranging between 10 to 20 billion cubic meters, promises to reinforce the Greek-Cypriot-Israeli alliance amid times of heightened Turkish provocation in the region.

Italian economic development minister Stefano Patuanelli, responsible for the country’s energy portfolio, has forwarded a letter of support for the project to Greek energy minister Costis Hatzidakis.

The Greek minister will sign the East Med agreement today with Giorgos Lakkotrypis and Yuval Steinitz, his Cypriot and Israeli counterparts, respectively. Italy is also expected to eventually join the partnership for this project.

Just hours before this signing ceremony, planned for 15:45, Greek gas utility DEPA and Energean Oil & Gas, active in the wider Mediterranean region, will sign a Letter of Intent at the energy ministry.

Importantly, this agreement promises to pave the way for a first commercial agreement reserving natural gas quantities ahead of the East Med pipeline’s construction, as DEPA will commit to purchasing natural gas quantities from Energean, extracting at Israeli gas field licenses. These quantities will represent approximately 20 percent of the East Med pipeline’s initial capacity.

The development prospects of East Med were recently propelled by a decision from IGI Poseidon, a 50-50 joint venture involving DEPA and Italy’s Edison, to accelerate the completion of all pending issues needed for the project’s maturity.

An upcoming East Med Gas Forum, to take place in Cairo January 15 and 16 with participation from the energy ministers of Greece, Cyprus, Israel, Egypt, Jordan and the Palestinian Authority, should help add further dimension to the alliance.

The East Med pipeline, planned as a complementary route to other projects in the wider region, stands as the most mature component of an EU plan entailing the development of an energy corridor to connect new energy sources in the east Mediterranean with European markets, including the southeast European market.

 

DEPA, Edison firm on East Med amid Turkish provocation

Italy’s Edison, part of the Poseidon consortium formed with Greek gas utility DEPA for the development of the East Med gas pipeline – planned to transport natural gas from Israeli and Cypriot fields to the EU via Greece and Italy – has decided to accelerate pre-construction procedures following escalating provocation from Turkey, energypress has reported.

A decision was reached at a recent Poseidon meeting in Milan to assign all needed project studies, financially backed by the EU, within the next two months for swifter completion of preliminary procedures, and, by extension, the project itself, a 2,000-km pipeline.

Greece’s energy minister Costis Hatzidakis and his Israeli counterpart Yuval Steinitz reiterated their support for the project at a recent meeting.

Turkey, seeking to block the project, recently reached a maritime border agreement with Libya, which EU leaders are set to reject as invalid, insisting the pact interferes with the rights of other countries bordering the Mediterranean Sea.

Cypriot Foreign Minister Nikos Hristodoulidis has received reassurances from Israeli government officials that the country is not involved in talks with Ankara for the development of an alternative gas pipeline, according to a Cypriot newspaper report. Israel remains committed to the East Med plan, it added.

DEPA’s Poseidon stake will be transferred to the Greek gas utility’s division for international projects. DEPA is being split ahead of its upcoming privatization.

Energean Israel signs GSPA with MRC

Energean Israel and MRC Alon Tavor Ltd. have signed a Gas Sales and Purchase Agreement (GSPA) for the sale of approximately 0.5Bcm/yr, or up to 8 Bcm over the term of the contract, Energean Oil and Gas, the oil and gas producer focused on the Mediterranean, has announced in a statement.

Supply will commence at Karish first gas and the contract term is for a period of 15 years from the date of signature, according to the statement. The GSPA is linked to the Israeli Electricity Production Index and has floor pricing and take-or-pay provisions, the statement added.

Energean estimates the GSPA will add revenues in excess of $1 billion over the term of the contract.

Energean also recently signed a contract amendment with OPCRotem that accelerated the rate of gas consumption and increased annual gas supply by 0.2Bcm/yr. This was accompanied by a shortening of the contract term such that there was no change in the total contract quantity of gas.

Energean now has firm GSPAs for the supply of 5.0Bcm/yr of gas into the Israeli domestic market, excluding the contingent GSPAs that have been signed with I.P.M Beer Tuvia (0.4Bcm/yr) and Or Power Energies (“Or”) (0.7Bcm/yr).

Energean submits applications to import, supply gas to Cyprus

Energean Oil & Gas, the oil and gas producer focused on the Mediterranean, has submitted applications to Cypriot authorities for import and supply of natural gas to Cyprus commencing 2021, the company has announced.

The submission of the applications follows the ‘Karish to Cyprus Preliminary Pipeline Development Plan’ that has already been presented to the Cyprus Energy Regulatory Authority, according to which, natural gas will be transported through pipelines from the Karish offshore block to the “Energean Power” Floating Production, Storage and Offloading unit, and from there through a pipeline to Vassiliko, Cyprus, where it will landfall.

The pipeline from the Energean Power FPSO to Vassiliko will have a total length of 215 kilometres and transport natural gas from the Karish North field, offshore Israel, which contains 25 BCM of discovered recoverable resources. Total investment will be circa $350 million and will be funded by Energean.

The Republic of Cyprus will bear no upfront cost. Provided that there will be no delays in permitting procedures, the project will allow the Republic of Cyprus to receive competitively priced natural gas from 2021.

Moreover, the project will further strengthen Cyprus’ geostrategic role in the Eastern Mediterranean, in accordance with the trilateral cooperation between Cyprus, Israel and Greece and in reference to the East Med Pipeline project that is planned to transport natural gas to Europe.

Mathios Rigas, CEO of Energean, stated:

“Energean’s proposal offers the Republic of Cyprus the option to switch to natural gas as soon as possible, and under the most competitive terms. Execution of the proposal will bring competition to the Cypriot natural gas market, decrease energy costs across the economy and result in enhanced diversity and security of supply. Our proposal enhances the planning of the Republic of Cyprus and the security of supply, as it is supplementary to the LNG import procedures launched by the Cypriot Government.

We expect that the Republic of Cyprus will take advantage of the options that the market offers for the benefit of the Cypriot economy and the consumers”.

Energean has already signed Letters of Intent (LOIs) with all three IPPs that have been granted a license to construct combined cycle power plants in Cyprus – Power Energy Cyprus, Lysarea Energia and Paramount Energy Corporation.

The Energean Power FPSO has a capacity of 8BCM per year and Energean has already signed firm GSPAs with Israeli IPPs and industrial consumers for 4.5 BCM per year for an average period of 16 years as of 2021.

 

PM decision on Crete link, wider PCI plan support needed today

Negotiations ran throughout the day until late last night as all sides involved sought to determine if an agreement is possible on the prospective Crete-Athens power grid interconnector and whether the wider Athens-Crete-Cyprus-Israel interconnection, an EU project of common interest (PCI), remains feasible under the current conditions.

Greek Prime Minister Kyriakos Mitsotakis must inform the European Commission  today on whether Athens supports the wider PCI project, a stance that would incorporate the Athens-Crete segment, or pursue this segment separately as a national project.

A European Commission PCI committee is meeting today to discuss the EU’s new PCI list for the next two years.

Greek power grid operator IPTO has been embroiled in a dispute with Cypriot consortium EuroAsia Interconnector over development control of the wider project’s Crete-Athens segment. EuroAsia Interconnector heads the wider project and has been joined by Elia, Belgium’s electricity transmission system operator, in a strategic alliance.

The Cypriot side entered yesterday’s negotiations with a slightly improved offer but the Greek side still considers it insufficient for constructive talks.

The Greek government has set red lines for the Athens-Crete segment, including no further delays for ongoing tenders offering converter station contracts, which effectively means technical term revisions will not be accepted. Greek officials insist compatibility for the wider project is ensured.

Gov’t making last-ditch effort for Cypriot deal on Crete grid link

The government, determined to move ahead with the country’s grid interconnection projects in support of economic and environmental concerns, is making a final effort to establish cooperation between Greek power grid operator IPTO and Cypriot consortium EuroAsia Interconnector, at odds for development control of a grid project to link Crete with Athens.

The EuroAsia Interconnector consortium heads a wider PCI-status project to link the Greek, Cypriot and Israeli grids.

“We need to have made decisions by October 4. Grid Interconnections are a priority for environmental and economic reasons,” energy minister Costis Hatzidakis stressed yesterday, speaking at a conference staged by the Hellenic Entrepreneurs Association (EENE).

The government is seeking to make the most of ongoing visits to Greece by Cypriot minister of energy, commerce industry and tourism Giorgos Lakkotrypis and former foreign minister Ioannis Kasoulides, now Euroasia Interconnector’s Chairman of the Strategic Council.

The Greek energy ministry has not ruled out an agreement with Euroasia Interconnector for the Crete-Athens grid link but has made clear swift development of the project is the top priority. A Greek-Cypriot-Israeli grid interconnection is still desired by the Greek government but the Cretan link is seen as even more crucial, Hatzidakis, the energy minister, is insisting, according to sources.

Euroasia Interconnector and the European Commission have requested the cancellation of a decision by RAE, the Regulatory Authority for Energy, awarding the Cretan project to Ariadne, a fully-owned IPTO subsidiary. This would delay progress.

“The only remaining prospect for cooperation would require Euroasia to provide the needed capital for a stake in Ariadne. But the Cypriot consortium appears unwilling or unable to do this,” an official deeply involved in the matter has informed.

The Cretan grid link project will be continued as a national project if current talks with the Cypriot side do not lead to any agreement, sources informed. If so, the Greek government is expected to deliver a pending reply to Brussels making clear that it does not support the entire Athens-Crete-Cyprus-Israel project.

Meanwhile, prospective bidders of a tender concerning the Crete-Athens grid interconnection project’s engineering, procurement and construction of two converter stations and a GIS substation have been given a further deadline extension. An initial August 30 deadline had been reset for September 30 before the latest extension.

Greek, Cypriot, Israeli officials seeking Italy’s East Med return

Greek, Cypriot and Israeli officials are working on details of a plan aiming to win back Rome’s support for the East Med pipeline, an ambitious 1,900-km pipeline to carry southeast Mediterranean natural gas from Israel to Europe via  Italy.

Efforts by Washington and Brussels to lure back Italy, whose coalition government has withdrawn the country’s support for the project, are pivotal.

Part of the overall diplomatic effort may be unveiled at an Athens energy summit today.

The Greek, Cypriot and Israeli energy ministers, Costis Hatzidakis, Giorgos Lakkotrypis and Yuval Steinitz, respectively, as well as US Assistant Secretary Francis Fannon, are taking part in the summit.

Fannon held successive meetings in Athens yesterday with Greece’s energy minister and the deputy foreign minister Konstantinos Fragogiannis. The East Med project’s promotion was a key subject of these meetings, especially Fannon’s talks with Hatzidakis, Greece’s energy minister.

Last May, Italian Prime Minister Giuseppe Conte, heading Italy’s right-wing populist coalition, declared Rome does not want the East Med pipeline to land on Italian territory. Instead, he proposed the pipeline’s link to TAP, another gas pipeline project being developed to carry Azerbaijani natural gas to Europe, via Italy.

East Med is envisioned to primarily carry deposits from Cyprus’ recently discovered “Aphrodite” gas field and the Israeli-controlled block “Leviathan” along a route stretching from Israel to Europe, also via Italy.

In response to Italy’s stance, Israel now appears to favor an alternate route for East Med that would avoid ending up on the Italian coast. Experts regard this prospect as difficult but not impossible as the pipeline project is still at the planning stage. Greece and Cyprus prefer Italy’s incorporation into the pipeline route.

 

 

New effort for East Med agreement at Athens energy summit

Greek gas utility DEPA and Italian energy giant Edison, collaborating on a plan to develop the East Med pipeline, envisioned to link the Greek, Cypriot and Israeli natural gas systems, are looking to take a crucial technical step ahead of construction.

Their YAFA Poseidon joint venture – spearheading the ambitious project, a 1,900-km pipeline stretch with an investment cost of between 6 and 7 billion euros – is gearing up for the launch of FEED (Front-End Engineering Design), environmental and detailed underwater research studies.

The European Commission has approved 34.5 million euros from the EU’s Connecting Europe Facility (CEF), a funding instrument, for these studies. The CEF amount will cover half the cost of the aforementioned preliminary studies, which will push the plan ahead to a mature stage.

The pipeline project is planned to carry southeast Mediterranean natural gas, primarily deposits from Cyprus’ recently discovered “Aphrodite” gas field and the Israeli-controlled block “Leviathan”, along a route stretching from Israel to Europe.

An agreement between Greece, Cyprus, Israel and Italy, where the pipeline is planned to conclude, is still needed.

East Med plans have been at a standstill ever since the current Italian government announced it was stalling the project.

According to sources, the Greek, Cypriot and Israeli energy ministers will seek to restart procedures and also send out a message of encouragement to the Italian government when they meet at an Athens energy summit tomorrow. US Assistant Secretary Francis Fannon will also participate.

East Med, still at a theoretical stage, promises geostrategic might for Greece, Cyprus and Israel, as well as the USA, on southeast Mediterranean energy matters, especially against Turkey’s opposition to hydrocarbon exploration within Cyprus’ Exclusive Economic Zone (EEZ).

The pipeline plan also promises to break Russia’s dominance of gas supply to the EU.