LNG

If tensions between Iran and Israel escalate into a regional war scenario, it could severely impact regional oil and gas exports as well as global shipping routes. Attacks on key facilities could wipe out nearly 1.4 million bpd of Iranian production and a full-blown war would choke the Strait of Hormuz, risking up to 12 million bpd of oil, analysts warn.

Upstream activity in Iran, so far, has stayed steadfast despite fighting following Hamas’ assault on Israel in October 2023. Iran's production rose by 227,000 bpd to 3.27 million bpd in August year-on-year, while Israel’s gas output grew 15% in 2023 and is expected to rise by 5% this year, supported by the Karish field.

Some $2 billion in greenfield investment had been planned for various upstream projects in the coming years. But production at the Karish and Katlan fields could be severely reduced if regional tensions escalate, hence future production and exports are at risk.

Anticipating the future is challenging, Rystad’s Middle East research director, Aditya Saraswat noted. So far – with no direct attacks between Iran and Israel, the conflict is largely a ‘proxy war’. As of today, there have not occurred major assaults on critical oil and gas infrastructure such as pipelines, storage facilities, or refineries.

All eyes on maritime borders

If things get worse, the maritime border agreement between Israel and Lebanon, signed in October 2022, could be torn to pieces. The agreement defines each country's rights over the Karish and Qana fields, with Israel retaining full rights to Karish and Lebanon to Qana.

“Escalating tensions could lead to the nullification of this agreement, affecting Israel's production from the Karish field, which is currently used for domestic supply,” Saraswat reckons, suggesting: “This disruption may also impact Israel's gas exports to Egypt and Jordan, which saw significant growth in 2023.

“Any decline in production and exports from Karish could be offset by increased output from other major fields like Tamar and Leviathan,” he noted.

The fields hold about 88 billion cubic meters (Bcm) of cumulative proven and probable (2P) reserves. Together, they form the independent’s core area of operation – following the divestment of its Croatian, Italian, and Egyptian assets. Production from the Katlan fields (Athena and Zeus) is expected to start by 2027.

All these fields are located near the Karish field near Lebanon’s maritime border, so analyst warn that any significant unrest could delay start-up.

Noble Energy, the US-based company with interests in key North American basins and in the East Mediterranean, has closed its deal to sell a 7.5 percent working interest in the Tamar field, offshore Israel, to Israeli-listed Tamar Petroleum.

Noble Energy, the US company with assets in key US basins and offshore Israel, said the business progressed in the third quarter as new US wells came on stream, Israeli natural gas production hit records and the Leviathan field in the East Mediterranean advanced towards completion in 2019 when it would reduce LNG needs in Jordan.

The Israeli Tamar natural gas field in the Eastern Mediterranean, the region’s main competitor to LNG and owned by Noble Energy of the US and Israeli companies including the Delek Group, has restarted production after a five-day shutdown caused by a pipeline fault.

The Tamar natural gas field in the Eastern Mediterranean, the region’s current main competitor to LNG and owned and operated by Noble Energy of the US and Delek Group of Israel, has been forced to shut down production because of a pipeline fault.

Delek Group, the Israeli company with growing income from its share of 33 trillion cubic feet of natural gas in the East Mediterranean, posted record revenues and net profits in 2016 as the Tamar field reached peak output and the Leviathan field is on track for first gas in 2019.

US company Noble Energy reported record natural gas sales to Israel from its Tamar field in the East Mediterranean where the even larger Leviathan gas field project advanced towards development and firmed up a supply deal with Jordan.

Delek Group, the largest Israeli energy operator in the East Mediterranean with stakes in the Tamar and Leviathan natural gas fields and LNG project plans, said the Tamar field reached peak production with record sales to Israel of 8.3 billion cubic metres in 2015, three years after coming on stream.