Leviathan gas set to land in Egypt after all?

Israel’s Delek Group has signed a preliminary agreement for the sale of gas from the giant Leviathan gas field in the Mediterranean.

According to a filing on the Tel Aviv Stock Exchange, the Leviathan partners, Delek Group and Noble Energy, have signed a letter of intent with Egypt’s Dolphinus Holdings, to negotiate a potential binding agreement for the sale and delivery of Leviathan gas through an existing pipeline to Egypt. The pipeline is operated by East Mediterranean Gas Company.

The draft agreement stipulates that Dolphinus would buy up to four billion cubic meters of gas per year, for a period of ten to fifteen years.

Worth noting, the final agreement is subject to various factors, the most important one being the actual final investment decision and the approval of the development of the giant gas field, which has been sitting undeveloped below the seabed for years. The Leviathan is estimated to hold approximately 622 billion cubic meters of gas.

There have even been some reports that the Leviathan might stay locked under sea after Italy’s Eni in September found a gas field considered even larger than the Leviathan.

The discovery was made at Eni’s Zohr well, in the Mediterranean Sea, offshore Egypt, and once developed, the gas will be used for domestic consumption in Egypt. The Zohr discovery spurred allegations that Egypt would not need the gas from Leviathan, however following today’s letter of intent, this now seems unlikely. According to Reuters, Leviathan could start producing natural gas somewhere between 2019 and 2020.

Also to remind, Dolphinus in not new when it comes to buying Israeli gas. In March 2015, the company agreed with Noble Energy and Delek to buy gas from Israel’s second largest gas field, the Tamar.

Offshore Energy Today Staff