Greece’s Energean inks additional gas sale contracts from Israel’s Karish field



Greece’s Energean announced on September 16 that Energean Israel has signed two new Gas Sales and Purchase Agreements (GSPAs), which, combined, represent quantities of gas of up to 1.4 billion cubic metres per year and increase total firm contracted gas sales from its flagship Karish project to approximately 7 billion cubic metres per year on plateau.

According to Energean, which owns 70% of Energean Israel, the new agreements represent contracted revenues of more than $2.5 billion over the life of the contracts, but require no further capital investment beyond Karish North, upon which Energean Israel expects to take Final Investment Decision later this year.

“We are delighted to have signed these additional gas sales agreements, which increase firm gas sales to 7 bcm per year on plateau from our flagship Karish gas project, which is on track to deliver first gas in the second half of 2021 and I want to thank Edeltech and Shikun & Binui for their continued trust,” Energean CEO Mathios Rigas said. “We remain committed to continue bringing competition and security of supply to the Israeli gas market even after we fill the Karish FPSO to its maximum 8 bcm per year capacity. The new contracts we signed today further strengthen our secured revenues stream, which is well-insulated against future commodity price fluctuations, and provide cash flows that will support our strategic goal of paying a sustainable dividend to our shareholders,” he added.

The GSPAs have been signed at levels that are aligned with the other large, long-term contracts within Energean’s portfolio and are only subject to buyers’ lenders’ consent

The majority of the quantities are represented by a GSPA to supply gas to the Ramat Hovav Power Plant Partnership, a partnership between the Edeltech Group and Shikun & Binui. RH Partnership was the winning bidder in the Israel Electric Corporation (IEC) Ramat Hovav tender process, the second IEC power plant in a series of five to be privatised. The GSPA is for a term of up to 20 years and contains provisions regarding floor pricing for the main plateau period and exclusivity. The annual contract quantity (ACQ) reduces after the first seven years following first gas from Karish.

The remainder of the quantities are represented by a second new GSPA that has been signed with an affiliate of the RH Partnership for the supply of gas for other existing power stations, Energean said, adding that gas supply will commence following first gas from Karish, achieving the plateau rate from January 2024. The contract term is for up to 15 years and the GSPA contains provisions regarding floor pricing for the main plateau period and take-or-pay.

Having secured sufficient resources to fill the Floating Production Storage and Offloading vessel (FPSO) for a number of years, Energean’s near-term strategy is to secure the necessary offtake to fill the remaining 1 billion cubic metres per year of spare capacity in the 8 billion cubic metres per year Energean Power FPSO, Energean said, adding that the company is assessing several opportunities in both the Israeli domestic market and key export markets in order to meet this target, alongside reviewing further growth opportunities across the nine exploration blocks that it holds in Israel to further expand its presence in the Eastern Mediterranean.


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