Energean has signed a transmission agreement with Israel Natural Gas Lines Ltd for capacity in the Nitzana pipeline, the new planned route for Israeli gas to Egypt, the UK-based gas producer said on Friday.
The Nitzana pipeline is a new onshore pipeline that will be built from Ramat Hovav in Israel to the border with Egypt in the Nitzana area.
The plan was announced last month. Chevron and state-owned Israel Natural Gas Lines signed an agreement to build a pipeline from Israel’s giant Leviathan gas field to Egypt, Leviathan project participant NewMed Energy said.
The project includes the construction of a pipeline and a compressor station in the Ramat Hovav area in southern Israel and about 65 km of pipeline (40 miles) to the Nitzana border crossing.
The agreed terms in Energean’s transmission agreement for the Nitzana pipeline are for the supply of up to 1 bcm per year for a 15-year period, with provisions for extensions and early termination, said Energean, which has producing assets in the Eastern Mediterranean and the UK North Sea.
The terms of the deal also include rights, during the construction phase, to access available capacity in the Jordan-North pipeline. Nitzana is expected to be operational no later than 36 months after all three parties – Energean, Leviathan, and Tamar – sign transmission agreements covering the full capacity of the project.
Energean’s 16.4% share of the construction costs for the pipeline and compression station is expected to be approximately $100 million.
“Energean is well positioned as a key regional player, and we remain focused on advancing all export opportunities from our Israeli assets, in the best interests of our shareholders, the Israeli gas market, and the region,” CEO
Mathios Rigas said.
“Although the bedrock of our cashflows is from our long-term domestic contracts, the signing of this agreement marks an important milestone to drive growth in our annual gas sales.”
By Charles Kennedy for Oilprice.com
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