LNG

UK major BP and Abu Dhabi National Oil Company have decided not to proceed with a joint offer to take control of NewMed Energy, the Israeli natural gas company with LNG export plans and a supplier of pipeline gas to Israel, Egypt and Jordan.

A statement from NewMed said that the merger process was suspended because of the conflict in Gaza between Israeli military forces and the Hamas terrorist group and would not be proceeding in the near future.

The suspension would remain in force until discussions on an actual transaction resumed or were totally terminated.

“There can be no certainty that discussions will resume or that an agreement will be reached in the future, nor as to the terms of an agreement should one be reached,” explained NewMed.

“The NewMed Partnership will update unitholders of further developments as appropriate,” it added.

Suspension details

NewMed stated that the joint committee looking into the BP-ADNOC deal has agreed “due to the uncertainty created by the external environment” to suspend discussions in relation to the proposed transaction.

BP and ADNOC had previously made a non-binding offer in March 2023 to take NewMed Energy private and out of the Tel Aviv Stock Exchange through an acquisition of the free float listed shares and a partial acquisition of a stake still held by Israel's Delek Group.

The transaction would have resulted in BP and ADNOC holding 50 percent of NewMed Energy.

NewMed, a stakeholder with US major Chevron Corp. in the large Leviathan natural gas field offshore Israel, had previously approved budgets for 2023 including gas field development to provide feed gas for a floating LNG export project.

BP and ADNOC had intended to form a new joint venture that would have focused on “gas development in international areas of mutual interest including the East Mediterranean” region.

The proposed BP-ADNOC transaction followed a move by NewMed Energy itself to merge with Capricorn Energy of the UK but the Israelis later withdrew in February 2023 from that bid.

Main assets

The main NewMed asset, the Leviathan gas field, supplies the Israeli domestic market as well as exporting gas by pipelines to Egypt and Jordan.

The Leviathan project shareholders are the NewMed Partnership with 45.34 percent, Chevron subsidiary, Chevron Mediterranean Ltd with 39.66 percent, and Ratio Energies with 15 percent.

NewMed, which announced its name change from Delek Drilling to NewMed Energy in February 2022, also has a stake in the Aphrodite gas field in the offshore economic zone of Cyprus, making it one of the biggest players in the East Med.

Four months after the start of the Gaza conflict BP and ADNOC said in February 2024 that they had formed a joint venture in Egypt that would initially focus on natural gas and would incorporate Egyptian concession stakes held by BP.

That joint venture is expected to be formed in the second half of 2024 and will be 51 percent owned by BP and 49 percent by ADNOC.

The BP-ADNOC Egyptian joint venture was originally planned to be the second phase of cooperation between the two companies in the East Med gas and LNG province after the planned acquisition of the 50 percent stake in Israel’s NewMed.

Chevron Corp., the leading LNG production company with operated plants from Australia to Angola, reported 5 percent higher first-quarter earnings, rising to $6.57 billion and noted that planned LNG maintenance was scheduled in the second quarter.

Chevron Corp., the US major with liquefied natural gas projects in nations such as Australia and mainly supplying the Asia-Pacific region, said events in Europe meant a gradual change in strategy to increase LNG activities in the Atlantic Basin, including the East Mediterranean.

Oct 27 (LNGJ) - Israel and Lebanon were scheduled to sign a US-sponsored agreement on October 27 on maritime borders in the new natural gas basin of the Eastern Mediterranean. A statement said that the accord gives the Israelis rights to the Karish gas field that has just started production, while Lebanon will retain full rights in the nearby Qana field. The Qana field is expected to be operated for the authorities in Lebanon by French major TotalEnergies.

   The London Stock Exchange-listed Energean Plc, the operator of the Karish field offshore Israel, confirmed that first gas had been safely delivered on October 26. Energean said its floating production, storage and offloading (FPSO) platform and the sales gas pipeline had capacity of 8 billion cubic metres per annum. “We have delivered a landmark project that brings competition to the Israeli gas market, enhances security of energy supply in the East Med region and brings affordable and clean energy that will displace coal-fired power generation,” explained Mathios Rigas, Chief Executive of Energean.

Three European energy majors and prominent LNG market participants, Total, BP and Eni have confirmed a substantial East Mediterranean natural gas discovery in the North El Hammad block located 11 kilometres offshore Egypt.

Total said that along with its partners, BP of the UK and Eni of Italy, the Bashrush well in the North El Hammad licence area encountered 102 metres net gas pay in high quality sandstones of the Abu Madi formation.

“A production test was conducted with flow rates of up to 32 million standard cubic feet of gas per day, limited by testing facilities,” said Total.

“It is estimated that future deliverability per well will be up to 100 MMscf per day, along with up to 800 barrels of condensate per day,” explained the Paris-based company.

“Future plans foresee development through tie-in to nearby existing infrastructures,” stated Total.

Kevin McLachlan, Senior Vice President Exploration at Total, said the discovery was a boost for the company, whose most prominent venture at the moment is the fully funded Mozambique LNG export project in southeast Africa,

“We are very pleased to announce this discovery in Egypt. These results support our strategy to allocate a significant share of our exploration budget to the search of hydrocarbons in the vicinity of existing infrastructures,” added McLachlan.

“These resources have low development costs since they can rapidly be tie-in and put into production,” he stated.

Total holds a working interest of 25 percent in the North El Hammad licence, alongside operator Eni with 37.5 percent and BP with 37.5 percent.

Total confirmed in July 2020 that full project financing was in place for the Mozambique LNG project using Area 1 feed-gas in the Rovuma Basin.

The joint venture companies in Mozambique have signed a $14.9-billion senior debt financing agreement proposed to construct a two-Train liquefaction plant with a total capacity of 13.1 million tonnes per annum.

Total said that the Mozambican venture represented a total post-financial investment decision outlay of $20Bln.

The Area 1 shareholding has Total as operator with a 26.5 percent participating interest alongside ENH with 15 percent.

Japan’s Mitsui & Co. owns 20 percent, India’s ONGC Videsh, Bharat PetroResources and Beas Rovuma Energy each hold 10 percent and Thailand’s PTTEP 8.5 percent.

Delek Group, a stake holder in the East Mediterranean Tamar and Leviathan natural gas fields supplying Egypt, Israel and Jordan increased revenues by 88 percent and boosted operating income.

Delek Group of Israel is discussing liquefied natural gas marketing possibilities for the giant Leviathan field in the Eastern Mediterranean currently under development and set to come on stream in 2020.

Delek Drilling is the largest shareholder in the Leviathan field and is looking into several options for some of the 22 trillion cubic feet of natural gas in the field that has not already been sold to pipeline customers in Israel and Jordan.

These include Delek sending volumes by an existing pipeline to Egypt for domestic use or as feed-gas for one of Egypt’s LNG export plants at Damietta or Idku, or setting up its own floating LNG infrastructure.

The Israeli company owns more than 45 percent of the Leviathan field while US company Noble Energy is the operator with just short of 40 percent. The balance is held by  stock exchange shareholders.

Firm pipeline supply agreements have already been signed for the Leviathan project with buyers such as Jordan’s National Electric Power Company, set to take 45 billion cubic metres in a deal lasting at least 15 years.

Another Leviathan supply deal has been signed by Israeli company Edeltech, which is buying the gas for power plants it owns with Turkish partner Zorlu Energy in Ashdod and Mishor Rotem.

Delek and Noble have also signed letters of intent to supply Leviathan natural gas to customers in Egypt such as Dolphinus Holdings and the operator of the Idku LNG export plant, now Royal Dutch Shell.

The Israeli media has also reported that ExxonMobil was interested in setting up a floating LNG option for the Leviathan project partners to join. The reports explained that while talks with ExxonMobil had taken place, it was too early to say if any agreement was likely.

ExxonMobil and Middle East LNG partner Qatar Petroleum have also recently made a large natural gas discovery in the East Med offshore Cyprus.

The ExxonMobil-QP discovery is at the Glaucus-1 well located in their exploration Block 10 in Cypriot waters.

Based on preliminary estimates the ExxonMobil resources are between 5 Tcf and 8 Tcf, enough feed-gas for a small-scale FLNG project.

Another possibility for the Israelis and Noble is transporting some Leviathan gas volumes to the Egyptian Idku LNG export plant.

Idku is east of the city of Alexandria and first came on stream in 2005 and has capacity to ship up to 7.2 million tonnes per annum from two liquefaction Trains. It also has two storage tanks with a combined capacity of 280,000 cubic metres.

Idku is now operated by Shell and has been on stream again since 2017 as new Egyptian discoveries turned a natural gas deficit into a surplus. Shell acquired its Idku stake when it completed the takeover of BG Group in 2016.

Egypt’s second LNG export plant at Damietta is still idle, but the resolution of a legal dispute between the owners and the Egyptian government has now been resolved.

The facility has capacity of 5.5 MTPA of output and has two storage tanks each of 150,000 cubic metres capacity.

Damietta is owned by Union Fenosa Gas, a joint venture between Spain’s Gas Natural, now known as Naturgy, and Italian energy company Eni. They hold 80 percent of the shares and the remaining 20 percent belongs to the Egyptian government.

Egypt said its rising natural gas surplus through 2020 would be used to satisfy demand from the power and industry sectors and to meet LNG export obligations as its overall output reaches more than 5 billion cubic feet per day.

The Egyptian Petroleum and Mineral Resources Minister, Tarek El Molla, addressed the nation’s natural gas output targets at a World Economic Forum meeting held at a Dead Sea resort at southern Shuneh in Jordan.

El Molla said he was pleased with the output from Egypt’s natural gas fields on the West Nile Delta, at Noor in North Sinai, the Atoll field in the East Nile Delta and the giant Zohr resources in the East Mediterranean.

The Minister noted that Egypt had recently launched an international tender for new exploration licences in 10 areas of the Red Sea where it would also have cooperation from Saudi Arabia.

El Molla held talks with his Saudi counterpart Khaled el Faleh on means of boosting joint cooperation.

“The two ministers exchanged views on opportunities of oil and gas exploration in the Red Sea and means of intensifying search and exploration operations in the coming phase,” said a statement.

At the same time the Egyptian minister said the nation was pursuing LNG exports from the Idku liquefaction plant near Alexandria, which resumed in 2017, and was also set to restart production at the nearby Damietta LNG facility.

“We are exporting 1.1 billion cubic feet per day and we expect that by the end of the year this figure will go up to 2 bcf per day, and this is when we resume the operation of the Damietta plant,” said El Molla.

“The second plant is expected to operate within this year,” added the Minister.

On the Red Sea tenders, interested companies have been given until August to submit their bids for the 10 licences to be issued on the production-sharing model and covering an area of 3,000 square kilometres.

“We are preparing to become an energy hub as everybody knows we have a fantastic geographical location between the Red Sea and the Mediterranean,” said El Molla.

“We also have important infrastructure, the Suez Canal, LNG plants in Damietta and Port Said, refineries on two coasts and the Sumed pipeline running from the Gulf of Suez to offshore Alexandria,” he explained.

“For example, we’ve signed agreements with Cyprus to bring their gas here, whether for our domestic use or to export on their behalf through our LNG facilities. There’s an opportunity to do the same with any other gas in the Eastern Mediterranean basin,” added the minister.

The start of production at the Zohr field by Italian energy company Eni in 2016 transformed the country from being an importer to again being an exporter.

As regards its import facilities in the form of two floating storage and regasification units (FSRUs) deployed at the port of Ain Sokhna in the Gulf of Suez, one FSRU would continue to be in operation for strategic reasons.

“The regasification plant, which is the FSRU standing at Ain Sokhna, is going to be there for strategic reasons but on idle mode,” he added.

ExxonMobil and Qatar Petroleum, the leading global liquefied natural gas stakeholders, have made a large natural gas discovery offshore Cyprus in the Eastern Mediterranean, opening more prospects for regional LNG production.

Noble Energy, the US exploration and production company with interests offshore the East Mediterranean and Equatorial Guinea, reported higher annual sales and said the first phase of the Leviathan project offshore Israel was on track.