Energean in $98 mln Israel deal, bid to supply Cyprus still stands but no takers
A Memorandum of Understanding signed by Energean and INGL, will see $98 mln paid to the Greek firm for constructing and transferring to Israel Natural Gas Lines the onshore and near shore part of nat gas facilities for the Karish and Tanin development.
CEO of Energean, Mathios Rigas said: “This is another important milestone for the Karish and Tanin development. The collaboration with INGL demonstrates the Israeli government’s support and commitment to the Karish-Tanin project, from which natural gas will flow to the Israeli market”.
Energean Oil and Gas plc, listed on both London and Tel Aviv Stock Exchange, announced it has signed a MOU with Israel Natural Gas Lines (INGL) for the construction and transfer of the near shore and onshore part of the infrastructure that will deliver gas from the Karish and Tanin FPSO into the Israeli nat gas transmission grid.
Energean will receive 369 million Israeli New Shekels, approximately US$98 million, 15% of which is expected to contribute to the Company’s available liquidity between now and end 1Q 2019.
Another 80% is expected handover of the infrastructure in 2021, with the remaining 5% due following an 18-month warranty period.
The MOU covers the onshore section of the Karish and Tanin infrastructure and the near shore section of pipeline extending to approximately 10km offshore.
The handover to INGL will occur shortly after the delivery of first gas from the Karish field in 1Q 2021. Following the handover, INGL will be responsible for the operation and maintenance of this part of the infrastructure. Energean will not incur any charges or tariffs for use of this infrastructure.
Energean expects the detailed agreement to be signed in 1Q 2019.
The Greek firm has also submitted a proposal to the Cyprus Government to supply natural gas to the country in the 1st quarter of 2021 at no upfront cost to the Cypriot citizens at a very competitive gas price,” a company source told the Financial Mirror recently.
“Energean always respects the rules and regulations of every country it operates in and has obviously confirmed its option to supply natural Gas to Cyprus in accordance with the proposal made,” the source added.
According to sources, Energean is unhappy that it is excluded from a tender to supply Cyprus with gas because the bids relate to LNG infrastructure only. Those same sources argue that the project will be much more expensive compared to gas supplied through a pipeline.
Energean is seeking approval from the Cyprus government to build a pipeline from its Israeli offshore gas fields and import 0.5 to 1 billion cubic metres (bcm) of gas per year to the island.
“Free Market principles should see the most competitive gas price to end customer be promoted, irrespective of the chosen infrastructure development scheme,” said the source.
The energy firm believes the market should decide which is the better offer, but Nicosia says it was an “unsolicited bid”.
Cyprus’ Natural Gas Public Company (DEFA) has issued a tender for the design, construction and operation of a floating LNG import terminal to be located at Vasiliko Bay, near Limassol, separately of efforts to import the fuel by January 2020 to avoid EU emissions fines.