Energean to Invest $1bn in Israel's Karish-Tanin

Clarification: the 2C figure for the two fields of 68 bn m³ better reflects their reserves than the 85bn m³ given in a version we published earlier

Greek upstream firm Energean's acquisition of the Karish-Tanin fields offshore Israel has been approved by the government and the firm has said it will formally submit a plan by mid-2017 to develop the fields, which it bought from two Israeli firms in August, with the expectation of producing first gas by 2020 and investing $1bn in them over the next few years.

The Karish and Tanin Fields, discovered in 2013 and 2011 respectively, have 2C gas resources of circa 2.4 trillion ft³ (68bn m³). The plan is that they should be developed by 2021. But there are doubts whether the gas will find ready buyers, as US firm Noble Energy and Delek Group jointly control Israel's larger Tamar and Leviathan gas fields and should always be able to offer cheaper gas.

Energean agreed in August to buy the fields for $148.5mn from Delek Drilling and Avner; it will pay Delek $40mn upon completion of that deal, then the rest in ten annual instalments. The instalments only have to start being paid once Energean takes the final investment decision (FID) or once its expenditure on the fields exceeds $150 mn. In addition Delek will be entitled to 9% royalties from the two gas fields Gas from Karish-Tanin will not be available for export, and any export quota will be transferred to Leviathan and Tamar.

Ya'acov Zalel