Chevron gets down to the nitty-gritty of gas production boost at Mediterranean field with $429 million earmarked for FEED

U.S.-headquartered Chevron and its partners in a giant natural gas field off the coast of Israel have greenlighted a multimillion-dollar investment to start the ball rolling on the front-end engineering design (FEED) phase for the proposed expansion of the gas export capacity from this Mediterranean field. The operator contemplates adding a fourth subsea transmission pipeline to the project’s underwater infrastructure.

The partners – Chevron, NewMed Energy, and Ratio Energies –  have greenlighted a $429 million investment to carry out FEED and preliminary procurement of long lead items related to the expansion of the Leviathan reservoir’s production system, which forms a basis for the promotion of Phase 1B of the field’s development plan to ramp up gas production and supply up to 21 billion cubic meters of gas (bcm) per year.

In addition, the partners are also exploring the possibility of laying a fourth subsea transmission pipeline from the field to the platform, enabling a maximum daily production capacity of approximately 2,350 million cubic feet (mmcf). The final investment decision (FID) for the development of Phase 1B is expected during the first half of 2025.

This expansion, which will significantly boost natural gas production annually, addresses growing demand in domestic and regional markets. The FEED is considered a critical step required before adopting a final investment decision, which is expected to be made by the partners once certain commercial and regulatory conditions are fulfilled.

To this end, negotiations are at various stages with potential customers, both in the domestic market and for export, to sign agreements and find buyers for Phase B’s natural gas. If the FID is adopted, the estimated start-up of natural gas production from the next stage of the Leviathan project is expected to be in the period between mid-2028 and mid-2029.

Yossi Abu, CEO of NewMed Energy, commented: “The Leviathan expansion project guarantees a solution for domestic natural gas demand and elevates Israel as a key energy supplier in the region. In these challenging times, promoting huge investments in Israel helps boost global market confidence in our economy.”

Since Phase B is envisioned to entail a liquefied natural gas (LNG) component to expand Leviathan’s customer base to Europe and the Far East, talks are underway with two existing liquefaction facilities in Egypt, together with exploring options for liquifying natural gas on a floating unit anchored in the Israeli exclusive economic zone (EEZ).

Last year, the Leviathan partners approved the budget for expanding the existing infrastructure to include a floating LNG (FLNG) facility, expected to produce 4.6 million tons of LNG per year. Recently, a deal was penned with Israel’s Eshkol Power Energies to supply natural gas for the Eshkol power plant.

The expansion and the future FLNG facility are perceived to be necessary for the potential LNG deliveries from the Leviathan reservoir to Germany under the memorandum of understanding (MoU), which NewMed and Uniper inked.

Located around 130 kilometers off the shores of Haifa, Leviathan is said to be not only the largest natural gas reservoir in the Mediterranean but also the largest energy project in Israel’s history, with 22.9 trillion cubic feet (tcf) of recoverable gas believed to be at its disposal.

The deep-sea field, comprising four subsea wells producing via a subsea manifold and two 120 km long pipelines, which lead to an offshore platform for gas processing, has been in production mode since December 2019. The gas is piped from the platform to shore into the Israeli national grid and distributed to Israel, Egypt, and Jordan.