2nd Jan 2019 08:33
LONDON (Alliance News) - Energean Oil & Gas PLC said Wednesday it has signed a gas sales and purchase agreement with IPM Beer Tuvia Ltd worth approximately USD900 million in total over 19 years.
Under the contract, Energean will supply an estimated 5.5 billion cubic metres of gas from its Karish and Tanin floating production storage and offloading vessel, located offshore in Israel.
The agreement, which will begin around 2024, adds between 265 million and 380 million cubic metres per year of gas sales to Energean. Energean estimates that the agreement will contribute around 900 million in revenue over the life of the contract.
However, Energean may supply IPM Beer Tuvia, an independent power producer, with limited volumes of gas between 2021 and 2024.
Energean said that the contract is subject to approvals and contingent on the results of its 2019 drilling programme, which includes the drilling of four wells in Israel. This includes the exploration well in its Karish North prospect, which Energean plans to spud before the end of March.
At present, Energean has signed gas sales and purchase agreements for 4.6 billion cubic metres of gas per year from its Karish and Tanin floating production storage and offloading vessel. The vessel is currently under construction and will have a total capacity of 8 billion cubic metres per year.
The remaining 3.4 billion cubic metres per year of spare capacity is expected to be filled "in the medium term".
IPM Beer Tuvia is building a new power planet which is due to begin operating in the second half of 2020, and gas supplied by Energean is to provide part of the gas needed for these operations.
First gas from the Karish and Tanin development is expected in the first quarter of 2021.
"The signing of this contract ahead of results from our 2019 drilling programme demonstrates not only the attractiveness of the Karish and Tanin fields but the strong incremental demand that we have identified for our gas and we will continue to target additional sales," said Energean Chief Executive Mathios Rigas.
"Our future sales contracts will target both the growing domestic and regional export markets, delivering attractive incremental economics for all of our stakeholders," Rigas added.
Shares in Energean were up 4.7% at 658.00 pence on Wednesday morning in London.
Related Shares:
Energean Oil & Gas