Israel gets first gas from Leviathan with exports to follow


By Ari Rabinovitch and Tova Cohen

JERUSALEM, Dec 31 (Reuters) - Israel's $3.6 billion offshore Leviathan field started production on Tuesday, paving the way for multi-billion dollar gas export deals with Egypt and Jordan in the coming weeks.

Natural gas began flowing from Israel's largest field despite regulatory delays and court petitions by groups opposing the project raised doubts that its operators would meet their end-of-2019 timeline.

However, Texas-based Noble Energy NBL.O, Israel's Delek Drilling DEDRp.TA and Ratio Oil RATIp.TA said that operations had started, effectively doubling the amount of Israeli-produced gas and lifting shares in both Israeli firms.

"Israel is now an energy powerhouse, able to supply all its energy needs and gaining energy independence," said Delek Drilling Chief Executive Yossi Abu.

The supply of gas from Leviathan wells, 130 kilometres west of the port city of Haifa, allows Israel to shift away from more polluting fuels, primarily coal, for electricity generation.

The gas will be transported from the platform via a subsea pipeline connected to Israel's transmission system and from there to consumers throughout the country.

Exports are expected to follow shortly.

Egypt will begin importing gas from Israel by mid-January, with the amount from Leviathan reaching 60 billion cubic metres over 15 years, while the nearby Tamar field will export 25.3 bcm in the same period. The value of the exports is estimated at $19.5 billion.

In 2016, the Leviathan group signed a $10 billion deal to supply gas to Jordan's National Electric Power Co.

Ratio CEO Yigal Landau said the companies believe there is strong potential for the discovery of additional major reservoirs in Israel's exclusive economic zone.

Shares in Delek Drilling were up 4.4% in Tel Aviv, while Ratio's gained 7.7%.

Leviathan production was delayed earlier this month until a court lifted a temporary injunction granted over environmental concerns.

Another brief delay followed as the Environmental Protection Ministry, which monitors emissions from the project, said it needed extra data from the firms running the field.

($1 = 3.4563 shekels)

(Reporting by Ari Rabinovitch and Tova Cohen; Editing by Alexander Smith)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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