LNG

SDX Energy plc, the UK-based oil and gas exploration and production company, said it had received multiple offers for its Egyptian natural gas assets and was considering them.

NewMed Energy, formerly Delek Drilling and owner of the largest Israeli offshore natural gas field and a likely future LNG feed-gas supplier, is continuing with the process of being listed on the London Stock Exchange through a reverse takeover of UK company Capricorn Energy.

Israeli company Delek Drilling, the owner of natural gas resources in the East Mediterranean, is changing its name to NewMed Energy as it expands the Leviathan gas field, increases its exposure to the LNG market and pursues exploration licences in Morocco.

Chief Executive of former Delek Drilling and now of NewMed, Yossi Abu, said that the success in production from Leviathan in the past two years, and especially the successful realization of the regional exports, had in effect turned NewMed Energy into a leading energy entity of regional importance. 

“Analyses showing the demand for natural gas (both regional and domestic) is rising constantly and justifies the expansion of production from the Leviathan field, in accordance with the approved development plans for 21 billion cubic metres annually,” said Abu.

“The second phase of Leviathan will concentrate on expansion of the infrastructures for the transmission of natural gas from the reservoir to additional consumers in its export markets along with exposure to global LNG,” stated the NewMed Energy CEO.

The company said it was also in an advanced process for the receipt of exploration licenses in Morocco as a leading partnership in its field with considerable professional knowledge and a proven track record in regional activity.

Morocco plans

“NewMed Energy has identified Morocco as a country with tremendous potential in both geological and commercial terms,” said the company.

“The board has authorized NewMed Energy's management to act, and it is currently in advanced negotiations for receiving exploration licenses in offshore Morocco, in both the Mediterranean and the North Atlantic Ocean,” stated NewMed Energy.

NewMed Energy CEO Abu said the launch of the new brand name was part of a strategic process.

“With Delek Drilling's well-known DNA, NewMed Energy will be an innovative and leading energy entity that will maximize the value of the existing core assets and promote significant processes such as the expansion of Leviathan and the development of the Aphrodite (Cyprus) reservoir, alongside the launch of exploration and production of natural gas in other countries in the Middle East,” stated the CEO.

“Exactly as Delek Drilling was, NewMed Energy will continue to be a key energy anchor in the region, with the aim of giving our investors both a stable dividend yield and growth,” Abu declared.

NewMed Energy stated that the “natural gas revolution in Israel” which continues with the Leviathan field, has led to a reduction of around 70 percent in pollution as a result of gas-fired electricity generation in Israel, and to a significant reduction in greenhouse-gas emissions.

“A reduction in air pollution can also be seen in Egypt and Jordan, countries to which gas from Leviathan is exported,” it added.

Egypt plans to construct a $7.5-billion petrochemicals, energy and bunkering complex at Ain Sokhna in the Gulf of Suex where it previously imported LNG during the era of natural gas shortages before the Zohr gas field and other discoveries were made in the Eastern Mediterranean and the Nile Basin.

The Egyptian government said the facility would be constructed on a 3.65 million square metres site and is the latest instalment in the country’s comeback story as an LNG exporter and now with plans to build its East Med energy hub.

The deal to develop the complex is between the Red Sea National Refining and Petrochemicals Company and the Suez Canal Economic Zone's development company. They aim to produce value-added petroleum products to fill Egypt's domestic needs and enable exports.

“The products include polyethylene, polypropylene, polyester, bunkering fuel and other petroleum and chemical products,” said a statement.

Egypt’s gas crisis during the “Arab Spring” social upheavals in North Africa and the Middle East in 2014 led to the diversion of natural gas supplies away from LNG production to meet growing domestic demand and to avoid power cuts.

The Gulf of Suez is a main transit point for global shipping and the development of bunkering will be part of the business.

Before the bringing on stream of the Zohr field in the East Med in 2017, Egypt had been forced to import LNG from 2015 in two floating storage and regasification units deployed at Ain Sokhna.

The Egyptians halted LNG imports two years ago and have now started regular exports of LNG from their two liquefaction facilities at Idku and Damietta, east of the port of Alexandria.

The Idku LNG export plant has been on stream again since 2017 under the operatorship of Royal Dutch Shell, which acquired original operator BG Group.

The Damietta facility only re-started operations and exports in February 2021.

With Damietta back on stream, Egypt added 4.5 million tonnes per annum of LNG output to its export volumes now totalling 12.5 MTPA.

The move forward for Damietta came after the resolution of  a long-standing dispute between the shareholders over contracts because of the closure.

Naturgy Energy, the Spain-based European utility, agreed to sell its stake in the Damietta plant and to rescind its Egyptian gas contracts on departing from the Unión Fenosa Gas (UFG) joint venture.

Naturgy’s UFG partners, Italian Eni company and the Egyptian Natural Gas Holding Company (Egas), reached the agreement under which Naturgy received a series of payments adding up to US$600 million.

Eni has taken over the contract for the purchase of natural gas for the LNG plant and receives corresponding liquefaction rights.

Delek Group, whose stakes in the offshore Leviathan and Tamar natural gas fields in the East Mediterranean make it a major supplier to Israel, Egypt and Jordan, posted a quarterly net loss as it prepares to welcome new partner Chevron and a possible LNG project after the US major’s agreed acquisition of Noble Energy.

The Tamar and Leviathan fields in Israeli territorial water have combined reserves of around 30 trillion cubic feet of gas

Delek Group said it ended second quarter with a net loss of 326 million Israeli shekels ($97M), mainly arising from one-time accounting provisions.

Delek said the drop in energy prices and the lockdowns applied in Israel and around the world, the group’s revenues in the quarter were 1.94 billion shekels ($577M), similar to the corresponding quarter last year, driven by a sharp rise in the Group’s revenues from core operations offshore Israel and in the North Sea.

The group’s Delek Drilling subsidiary holds the natural gas stakes and it completed the refinancing of the Leviathan field with a $2.25 billion loan.

Delek Drilling has noted that in recent weeks, after the reporting period, there had been a “significant increase” in demand for natural gas.

Revenues from the sale of gas in Israel net of royalties rose by 64 percent in the second quarter to 498 million shekels ($148M) compared with revenues of 304M shekels in the same three months of 2019.

“The increase was mainly due to the start of gas production from Leviathan, and the sales to the local market as well as exports to Egypt and Jordan,” said Delek.

The major increase in sales of natural gas and condensate led to a growth in operating profit before one-time provisions were made.

Chevron agreed in July 2020 to acquire Houston-based Noble Energy and its assets in US shale basins and the East Med, including the Leviathan and Tamar fields.

The definitive agreement valued at $5Bln between Chevron and Noble has been approved by both boards and is expected to close in the fourth quarter.

Delek Drilling has said the acquisition could mean the development of LNG export project.

“Chevron brings a significant LNG capability into the Leviathan project,” the Israeli company said at the time.

Delek also runs a UK North Sea oil and gas business through its subsidiary Ithaca Energy.

The Israeli company said Ithaca’s revenues in the quarter were 971M shekels ($290M) compared with revenues of 350M shekels in the parallel quarter last year.

Delek said average daily output by Ithaca amounted to 70,400 barrels of oil equivalent per day compared with 15,200 boe/d in the same quarter of 2019.

Delek had acquired the North Sea fields from new East Med partner Chevron.

The company’s provisions in the earnings came in relation to the disposal of two subsidiaries, Cohen Development and Phoenix.

As the quarterly results were announced, Delek noted that Bill Dunnett had been appointed as CEO of Ithaca.

Dunnett, an engineer by training, has 35 years of experience in the field of energy and gas, during which time he served as CEO of Repsol Sinopec Resources UK and in a range of senior positions in leading energy companies, including Shell, Petrofac and Halliburton.

“Delek Group’s core operations continued to demonstrate strong performance in the second quarter,” said Idan Wallace, President and Chief Executive of Delek Group.

“Major steps to strengthen both capital and collateral that the company completed during and following the reporting period, provide a tailwind to continue with the successful implementation of the Group’s strategy,” he added.

Italy’s Eni and partners BP of the UK and French major Total have made a natural gas natural discovery in the North El Hammad block in the Mediterranean offshore Egypt, which has again become an LNG exporter because of other gas finds such as the Zohr field.

Global energy companies last year made the highest number of oil and natural gas discoveries since 2015, including several set to be used in liquefied natural gas production.

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.

Italian energy engineering company Saipem said it expected to be awarded an additional ramp-up contract worth over $1.2 billion for the huge Egyptian Zohr natural gas field in the East Mediterranean that has enabled the nation to end liquefied natural gas imports and to re-start LNG exports.

The Egyptian Government has approved the sale of stakes to BP of the UK and Mubadala Petroleum of the United Arab Emirates in the Nour North Sinai offshore exploration concession after both companies had previously invested in the huge Zohr field that enabled the Egyptians to re-start LNG exports.