The Israeli government has approved plans to more than double the country’s natural gas exports and expand production at the giant Leviathan Gas Field in a bid to improve energy security and strengthen diplomatic ties. Energy Minister Eli Cohen has given the greenlight for the export of an additional 118 billion cubic meters (bcm) of natural gas from the east Mediterranean reserves, more than double the 105 bcm previously approved. NewMed Energy (OTCPK:DKDRF) has revealed that its partners Chevron Corp. (NYSE:CVX) and Ratio Oil Corp intend to invest $400 million to $500 million in front-end engineering design and long-lead items for the expansion. Leviathan is one of the world’s largest deep-water gas fields with an estimated 22.9 trillion cubic feet of recoverable gas. The 330-square-kilometer field was discovered in December 2010 by NewMed Energy, Chevron Corp and Ratio Oil Corp. NewMed is Leviathan's main operator with a 45.3% working interest; Chevron has a 39.7% interest while Ratio has a 15% stake.
According to NewMed, Israel plans to gradually expand Leviathan production to 21 bcm annually from 12 bcm currently. The group is currently negotiating new deals to sell gas domestically and internationally. Last year, Israel exported 8.6 bcm of gas to Egypt in 2023, good for a 39% Y/Y increase and sent another 2.9 bcm to Jordan.
Two years ago, Israel, the European Union, and Egypt signed a memorandum of understanding (MoU) to boost natural gas exports to Europe, with the framework hailed as the first to allow Israel to export "significant" amounts of gas to Europe.
Israel Becomes A Regional Gas Powerhouse
The Middle East has traditionally been recognized as a global oil and gas powerhouse thanks to the region’s staggering 75.8 trillion cubic meters in natural gas reserves, the world’s largest, and significantly more than 56.6 trillion cubic meters held by the Commonwealth of Independent States (former constituent republics of the Soviet Union). However, in recent years, Israel has emerged as a natural gas powerhouse in the Mediterranean with the country’s natural gas reserves having grown an impressive 40% over the past decade thanks in large part to increased drilling and exploration activities. During that time, offshore production has expanded five-fold growth since the start-up of Israel's first major producing Tamar field in 2013. Israel has seen its gas reserves grow from 780 billion cubic meters (bcm) in 2012 to 1,087 bcm at the end of 2022, while 119 bcm was extracted over the same period.
The Levant Basin in the eastern Mediterranean Sea has emerged as one of the world’s important gas reserves with 85 trillion cubic feet (~2.4 trillion cubic meters) discovered over the past two decades by countries in the region, including Israel. The gas-rich offshore basin straddling Egypt, Israel, Cyprus and Lebanon has attracted some of the world's top energy companies as Europe scrambles to secure supplies to replace Russian gas.
NewMed Energy, Chevron and Anglo-Dutch oil major Shell Plc (NYSE:SHEL) have also partnered in the Aphrodite Gas Field. Discovered in 2011, the Aphrodite natural gas field is located about 170 kilometers south of Limassol in Cyprus, just 30 kilometers northwest of Israel’s Leviathan gas reservoir. An appraisal well has already been drilled to confirm assessments regarding the nature and size of the Aphrodite gas deposit, and marks a “significant step” towards its development. The well is expected to serve as a production well following the completion of the development of the reservoir.
“Alongside advancing phase two of the Leviathan reservoir, which satisfies the needs of the local and regional economy, we are making progress and significantly advancing the development of the Aphrodite reservoir. Global demand for natural gas is increasing, and a large reservoir like Aphrodite could help meet the demand,” NewMed Energy CEO Yossi Abu has said.
Not surprisingly, Big Oil companies are rushing to Israel to stake their claims on the country’s newfound gas riches. Last year, NewMed shares jumped more than 60% after BP Plc (NYSE:BP) and Abu Dhabi National Oil Company (ADNOC) announced they agreed to form a joint venture to acquire a 50% stake in the Israeli explorer in a $2 billion deal. Unfortunately, the two companies announced in March 2024 that they had suspended the deal amid the ongoing Israel-Hamas war. Experts had earlier warned that a surge in civilian casualties could make it politically untenable for the companies to proceed, with the death toll in Gaza reportedly in excess of 30,000.
By Alex Kimani for Oilprice.com