LNG

NewMed Energy, the Israeli company with stakes in the East Mediterranean gas fields, has received approval in principle to export more volumes from the prolific Leviathan field offshore Israel.

NewMed Energy, the Israeli company with stakes in the East Mediterranean gas fields like Leviathan offshore Israel and the Aphrodite field offshore Cyprus and with LNG export ambitions, reported solid earnings and steady exports to regional markets amid advances in several projects.

NewMed Energy, the Israeli company with stakes in the East Mediterranean gas fields of Tamar and Leviathan offshore Israel and with LNG export ambitions, has published its annual results showing pipeline gas continued to flow to the Israeli domestic market and to Egypt and Jordan even after the outbreak of war in Gaza in October 2023.

The Egyptian Natural Gas Holding Co. (EGAS), the government-run energy company with stakes in Egypt’s two LNG export plants and other gas field assets, has established a subsidiary in Saudi Arabia to help attract more investment.

Egypt's Ministry of Petroleum said that the Saudi unit had been set up by EGAS with initial capital of 2 million Saudi riyals ($533,000).

The Egyptians said in their statement that EGAS would own 80 percent of the venture called “Modern Gas Saudi Arabia” and explained that it would be part of the Egypt’s strategy for offshore expansion in the East Mediterranean in cooperation with other Arab nations such as the United Arab Emirates.

EGAS has various stakes, direct and indirect, in Egypt’s expansive oil and gas assets and the two LNG export plants, Damietta and Idku, located east of the port city of Alexandria.

ADNOC-BP deal

Abu Dhabi National Oil Company (ADNOC) and UK major BP said in Mid-February 2024 that they planned to form a joint venture in Egypt that would initially focus on natural gas and 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 a 50 percent stake in Israeli gas producer NewMed Energy.

Negotiations on the proposed NewMed agreement for BP and ADNOC started in March 2023, though have now been officially suspended.

As part of the agreement for Egyptian expansion and energy investment by ADNOC, BP will contribute its interests in three development concessions, as well as exploration agreements in Egypt to the new joint venture.

ADNOC will make a proportionate cash contribution which can be used for future growth opportunities.

Gas fields

This is the first major natural gas deal for BP under new Chief Executive Murray Auchincloss.

Both companies said that this new joint venture partnership would enhance Egyptian energy security and the economic potential of the region’s most populous Arab country.

The natural gas concession to be included in the Egyptian joint venture include BP’s 10 percent in the Shorouk block containing Egypt’s huge Zohr gas field.

BP’s 100-percent owned North Damietta interests are also included along with BP’s 50-percent stake in the North El Burg concession with the undeveloped Satis field.

Three other exploration concession included are North El Tabya, Bellatrix-Seti East and the North El Fayrouz block.

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.

The Government of Cyprus said it was in alignment with US major Chevron Corp. on the imminent development of the Aphrodite natural gas field in the Eastern Mediterranean, the new regional natural gas and LNG hub despite security concerns over the ongoing conflict.

NewMed Energy, the Israeli company with stakes in the East Mediterranean gas fields of Tamar and Leviathan offshore Israel and the Aphrodite field offshore Cyprus and with LNG export ambitions, has reported earnings and the impact of the war in Gaza as well as the state of the moves by UK major BP and Abu Dhabi National Oil Company for a stake in NewMed.

Chevron Corp., the US energy major and global LNG producer, has re-started production from the Tamar natural gas field supplying Israel, Jordan and Egypt from East Mediterranean platforms and pipelines following its closure for more than a month by the Israeli government in the wake of attacks against Israeli civilians by Hamas terrorists from the Gaza Strip.

NewMed Energy, the Israeli company with a stake in the Aphrodite natural gas field offshore Cyprus, said talks would continue with the Cypriot Government after the rejection of a new field development plan that includes transporting pipeline gas to Egypt for liquefaction and export to Europe as LNG or for domestic use.

The Cypriots are in favour of the Aphrodite volumes being shipped to Egypt, though are against the new plan that does not include a previously outlined floating gas processing plant at the field in Cypriot waters.

The partners in the Aphrodite licence are NewMed and energy majors Chevron Corp., the operator of the Aphrodite field, and UK-based major Shell.

The Shell stake came from its acquisition of BP Group and Chevron’s from buying Noble Energy.

The field is located in Block 12 of the Cypriot Exclusive Economic Zone (EEZ) 170 kilometres (106 miles) offshore the Cypriot city of Limassol and is estimated to hold around 4.4 trillion cubic feet of natural gas.

“The Partnership respectfully reports that, according to a letter of reply delivered to the project's operator, Chevron Cyprus Limited, the government of Cyprus has decided not to approve the Updated Plan, and has invited the partners in the Aphrodite Reservoir to continue the discussions on the matter in early September 2023,” NewMed explained.

New plan

According to the Updated Plan, the production of natural gas from the Aphrodite field and the processing thereof would be done through the construction of a subsea pipeline and connection to existing offshore and onshore infrastructure in Egypt, without the construction of a floating production and processing facility within the area of the Reservoir.

“The letter of reply states several reasons for the decision of the Cypriot government not to approve the Updated Plan, including the claim that the Updated Plan is expected to increase the technical and commercial complexity of the project, and is not expected to produce the advantages put forward as detailed in the report of 31 May 2023,” NewMed added.

“The partners in the Aphrodite Reservoir, with the assistance of their outside counsel, intend to consider the implications of the decision by the government of Cyprus and are preparing for the continued discussions,” stated NewMed.

Scheduled for commissioning by 2026, the Aphrodite gas field will be capable of delivering more than $9 billion of direct economic benefits while providing energy independence to the Republic of Cyprus.

The Israeli company, headquartered at Herzelia, north of Tel Aviv, said that the updated plan was expected to accelerate and reduce the cost of development.

LNG needs

Analysts say that the Aphrodite volumes are likely to be directed to the Egyptian Idku liquefaction plant east of Alexandria where Shell is the operator.

NewMed has a 30 percent shareholding in the Aphrodite licence while Shell and Chevron each own 35 percent.

NewMed’s other main asset is its large stake with partners in the Leviathan gas field offshore Israel, which is one of the largest in terms of its customer base in the East Med.

Leviathan is the subject of continuing pre-engineering work and discussions for the promotion of a Leviathan field expansion and the development of a floating LNG project.

The Leviathan field already supplies the Israeli domestic market as well as exporting pipeline gas to Egypt and Jordan.

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 was formally known as Delek Drilling and changed its name to NewMed Energy in February 2022.

NewMed Energy, the Israeli natural gas company and LNG project developer in the East Mediterranean, has taken a positive final investment decision for a third natural gas pipeline for production wells in the Leviathan gas field amid LNG export and domestic supply plans.