Eventful year ahead for Energean with FPSO nearly ready for Israeli waters

Hydrocarbon exploration and production company Energean expects an eventful year ahead as it is preparing for an upcoming sail-away of its Energean Power FPSO from Singapore to Israel and the first gas from the Karish project later this year as well as the high-impact drilling campaign in Israel.

In its latest operational update on Tuesday, Energean revealed that the Karish development remains within budget and is on track to deliver the first gas by 3Q 2022. On 31 December 2021, the overall project was 92.5 per cent complete with the FPSO being 98.4 per cent complete.

Namely, in December 2021, the penultimate major technical milestone associated with the construction of the Energean Power FPSO was successfully completed, involving testing the telescopic design of the emergency flare stack. This will allow the vessel to pass under the Suez Canal Bridge, hence avoiding the need to either sail around Africa or to install the system in the Mediterranean Sea. This has further reduced the environmental footprint of the construction phase whilst shortening the schedule.

Excluding any further impact from COVID-19, which previously affected the project, the vessel is expected to be ready for sail-away from Singapore by the end of this quarter. Energean expects approximately four-five months from sail-away to first gas, including the tow from Singapore to Israel, hook-up and commissioning.

Commissioning and testing of mechanical and electrical systems are being done in the yard before sail-away with the final commissioning work to be performed offshore upon arrival in Israeli waters.

Also in December 2021, Energean signed an EPC contract with Kanfa for the second oil train, which will increase the FPSO’s liquid production capacity to 32.0 kbod from 18.0 kbod.

The second oil train, second gas sales riser, and Karish North are progressing on schedule and are on track to come on stream in H2 2023.

Energean’s preparatory work ahead of this quarter’s drilling campaign is progressing in line with expectations. The beginning of the high-impact growth drilling campaign in Israel, including Block 12, is scheduled for March 2022 with the first drilling results anticipated during 2Q 2022.

Energean has already contracted a rig from Stena Drilling for its 2022 – 2023 growth drilling programme offshore Israel and booked Halliburton under an integrated services contract to execute the well drilling and completions. The campaign is expected to target the derisking of unrisked prospective recoverable resources of over 1 billion barrels of oil equivalent (boe).

The Karish North development well is scheduled to be drilled during summer 2022 following the completion of the Athena (Block 12) exploration well and the Karish Main-04 appraisal well. After that, Energean also has two optional exploration wells in mind – Hermes (Block 31) and Hercules (Block 23). A decision on whether to drill the optional wells, as part of this drilling campaign, will be made in 3Q 2022.

Mathios Rigas, Chief Executive of Energean, commented: “The FPSO for our flagship project, Karish, is expected to be ready for sail-away by the end of this quarter. This will kick-start an eventful 2022 with the high-impact drilling programme in Israel beginning in mid-March, first gas from Karish by Q3 and first gas from NEA/NI in Egypt by Q4.”

With its other development projects in Israel, Italy, and Greece also on track, Energean believes it is well-positioned to reach its medium-term targets of over 200 kboed production, $2 billion annual revenue and $1.4 billion EBITDAX.