Leviathan Partners Win Israel Approval for Increased Gas Export

NewMed Energy LP and its co-venturers in the Leviathan field offshore Israel received an initial permit from the Energy Ministry to raise its natural gas allotment for overseas markets, the local majority owner said Wednesday.

The government allows, “as of the present time, the export of additional natural gas from the Leviathan reservoir in a total quantity of up to 118 BCM [4.2 trillion cubic feet], which may increase to up to 145 BCM [5.1 Tcf] upon fulfillment of certain conditions”, NewMed Energy said in a regulatory disclosure.

The approval is for the Phase 1B project of the deepwater gas field. Leviathan, discovered 2010 off the coast of Haifa city, started production December 2019 under Phase 1A, which can produce up to about 424 Bcf annually. Leviathan “since has become a cornerstone of gas supply in Israel, Egypt and Jordan”, NewMed Energy says on its website.

Phase 1B aims to raise Leviathan’s annual production to as much as 742 Bcf and expand its export market beyond the Middle East to Europe and Asia.

“The demand for natural gas in Israel and regional markets is growing, and we are prepared to expand production from the Leviathan project accordingly”, Yigal Landau, chief executive of 15 percent owner Ratio Energies LP, said in a separate statement Wednesday.

NewMed Energy, a Tel Aviv-based gas and condensate exploration and production company under Delek Group, owns 45.34 percent of the 127.41-square mile Leviathan, which it says is the largest gas field in the Mediterranean with 22.9 Tcf of recoverable gas. Chevron Mediterranean Ltd., which renamed from Noble Energy Inc. following the United States giant’s 2020 acquisition of Noble Energy, holds 39.66 percent.

“In view of the provisions of the Commissioner’s Letter, the Leviathan partners are working on adopting, in the upcoming period, a decision regarding the performance of front-end engineering design and preliminary procurement of long lead items in connection with expansion of the Leviathan reservoir’s production system, in the context of promotion of Phase 1B of the Leviathan project’s development plan, which if adopted will have an estimated budget of approx. $400-500 million (100 percent)”, NewMed Energy told the Tel Aviv Stock Exchange, referring to the letter of approval for the increased export volumes.

“As of the date of this report, the Leviathan partners are continuing to conduct negotiations at various stages for the signing of agreements for the sale of natural gas 2 to customers in the domestic market and for export, based both on the current production capacity and on the future production capacity in the framework of the third pipeline project1 and Phase 1B of the Leviathan project’s development plan”, the filing added.

Last year, NewMed Energy announced that the Leviathan consortium agreed to invest around $568 million to develop the third pipeline serving the field.

The new conduit will grow the maximum supply delivered to Israel Natural Gas Lines Ltd. from approximately 1.2 Bcf a day (Bcfd) to about 1.4 Bcfd from mid-2025, NewMed Energy said in a filing July 2, 2023.

Leviathan has two operating pipelines stretching 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.

“While the current development is strictly based on the Israeli natural gas grid and on a pipeline network, Phase B of the project is expected to include a significant liquefaction component, that will expand Leviathan's customer base beyond the Eastern Mediterranean, to Europe and the Far East”, NewMed Energy says on its website. “To that end, commercial negotiations are being held with two existing liquefaction facilities in Egypt, while an option for liquifying natural gas on a floating facility anchored in the Israeli EEZ [exclusive economic zone] is being explored”.

From 2044, export from Leviathan will only be allowed after domestic supply is guaranteed, according to the decision letter on the increased export volumes, NewMed Energy said.

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