NewMed Energy (TSE: NWMD), the Delek unit that holds a 45.34% stake in the Leviathan gas field, has notified the Tel Aviv Stock Exchange (TASE) that field operator Chevron, which holds a 39.66% stake, has decided to suspend work. Work on extending a marine pipeline within the third pipeline project, due to the escalation in the north, until April 2025, “according to the timelines in the backlog of contractor requests and the security situation that will prevail in the region.”
This means that the completion of the project will be delayed by at least six months. Neomed stressed that “there is no material cumulative impact on the total value of the partnership’s discounted cash flow from the Leviathan project, but it is expected to have a material negative cumulative impact on the expected cash flow in 2025.” Leviathan Partners broke ground on the third pipeline project in July 2023. The partnership also includes Ratio Energies (TASE: RATI) (15%).
The underwater pipeline is being laid 120 kilometers west of Haifa and is designed to transport gas to the production platform, which is about 10 kilometers offshore from Dor Beach. The project aims to increase Israel’s daily supply of natural gas by 0.2 billion cubic feet. According to the original plan, the first gas was scheduled to flow through the pipeline in the second half of 2025, but now, works have been halted until closer to the date when the project was scheduled to start.
Meaning: less gas to export
In 2023, Israeli natural gas consumption rose to 24.7 billion cubic meters: 13.1 billion cubic meters for the domestic economy and 11.6 billion cubic meters for export. There was a 3.5% increase in domestic consumption in 2023 and a 21% increase in exports. The delay in the third pipeline project means that there will be less gas for export, although there is no shortage for domestic consumption. Last year, 75% of the gas was exported to Egypt and the rest to Jordan.
In 2023, the Leviathan field produced 11.1 billion cubic meters of natural gas, the Tamar field 9.1 billion cubic meters, and the Karish field 4.6 billion cubic meters. 78% of the gas exported last year was produced from the Leviathan field, the rest comes from the Tamar field while the Karish field produces only for the local economy. 17% of the gas consumed in the local economy comes from Leviathan, 34% from Karesh, and 49% from Tamar.
NEOMED said that due to the war, “following the latest security developments and relying, among other things, on operational and technical considerations of the network, the operator from time to time, in accordance with the platform’s operating instructions and its safety procedures, initiates an interruption of production from the Leviathan field for certain periods of time.” The company added that the current decrease in production volume due to the cessation of production “was not significant compared to the annual production volume.”
Published by Globes, Israel Business News – en.globes.co.il – on October 7, 2024.
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