Israel’s Energy Ministry mulls construction of LNG facility

Israel’s Minister of Energy and Infrastructures Eli Cohen has instructed an introspection to beryllium conducted of nan options for building a floating liquefied earthy state (FLNG) installation successful Israel’s economical waters, sources adjacent to nan matter person told “Globes.” On nan schedule is besides a imaginable onshore LNG terminal but contamination factors for nan coastal organization raise doubts astir nan feasibility of specified a plan.

Israel presently uses 3 pipelines for exports: EMG to Egypt, which has an yearly capacity of 5.5 cardinal cubic meters (BCM), nan North Jordan pipeline, which has an yearly capacity of 7 BCM, and which serves exports to some Jordan and onto Egypt, and nan South Jordan pipeline, pinch an yearly capacity of 1 BCM, which serves nan Dead Sea Works successful Jordan. In nan adjacent 3 years nan Hovev-Nitzana pipeline is expected to travel on-stream conveying 6 BCM annually to Egypt.

The purpose successful mounting up an FLNG aliases onshore LNG installation is to disperse consequence from Israel’s perspective, pinch specified a important magnitude of state exports limited connected Egypt, some arsenic a nonstop user and for liquefaction successful nan 2 Egyptian LNGs successful Idku and Damietta. An LNG allows earthy state produced to beryllium stored connected ships for export to anyplace successful nan world. The measurement of LNG is six times smaller than earthy gas.

The first players to raise nan anticipation of an LNG installation are nan Leviathan partners NewMed Energy (TASE: NWMD) (45.33%), Chevron (39.66%) and Rastio Energies (TASE: RATI) (15%). At coming Leviathan’s yearly accumulation capacity is 12 BCM pinch plans to raise it to 14 BCM adjacent twelvemonth by laying a 3rd pipeline from nan state section to nan level astatine an finance of $570 million. In nan agelong term, NewMed Energy has a $3 cardinal scheme to summation accumulation to 21-23 BCM annually done 2 further drillings down to nan state section and laying a 4th pipeline and different modules to grip nan earthy state connected nan platform.

A caller state export way required

For specified an investment, nan Leviathan partners want first of each to spot nan Ministry of Energy and Infrastructure Petroleum Commissioner o.k. a accumulation and export scheme that would guarantee a return connected nan investment. Such a scheme could see some description of usage of nan Egyptian accommodation and a stand-alone LNG installation successful Israel. In 2023, Egypt utilized astir 4 cardinal tons retired of a imaginable 20 cardinal tons capacity astatine Damietta and Idko. On nan 1 hand, this allows for description of nan size of exports based connected existing Egyptian facilities. On nan different hand, it does not dispersed risks, particularly successful specified a problematic economical play for nan El-Sisi authorities that could create successful allm benignant of directions.

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As a result, nan cognition is expanding that an further export way is required that does not walk done either Egypt aliases Jordan, and which could beryllium obtained, for example, done an LNG installation successful Israel. The main rumor concerning an FLNG is nan important summation costs complete nan past 2 years of building specified facilities. Construction costs successful nan various shipyards that woody pinch FLNGs during nan Covid pandemic was astir $750 cardinal for an infrastructure that tin nutrient 1 cardinal tons of liquefied state per year. Prices person now doubled to astir $1.5 cardinal dollars. Those taking advantage of request to group specified prices are, chiefly South Korean shipyards specified arsenic Samsung and Hyundai.

Worldwide location are presently 5 progressive FLNG projects: successful Australia, owned by Shell pinch an yearly accumulation complaint of 3.6 cardinal tons; 2 successful Malaysia belonging to Petronas, producing 2.7 cardinal tons annually; successful Gabon Perenco is producing 0.7 cardinal tons; and successful nan Congo, Eni is producing 3 cardinal tons. In summation to each of these, location are FLNG projects successful nan building stages, including nan Gulf of Mexico, and these are encouraging nan value increases astatine nan shipyards.

According to estimates, building of an FLNG installation successful Israel’s economical waters would costs $7 billion. The authorities is nan regulator successful nan state field, and does not person nan authority to bid backstage financing for projects. Due to nan precocious costs, Cohen supports some nan anticipation that nan Leviathan partners would build nan LNG facility, aliases establishing a wide consortium of each nan state players successful Israel, to disagreement nan finance betwixt them, while exploiting nan economical benefits of nan FLNG facility.

Minister of Energy and Infrastructures Eli Cohen told “Globes,” “Building an onshore LNG aliases FLNG installation will make it imaginable to maximize nan state’s revenues from state exports, diversify export targets, service arsenic an important instrumentality successful nan governmental arena successful wide and vis-a-vis Europe successful particular, and will lend to nan creation of jobs.” In addition, if a determination is made to further summation state exports to Egypt, nan curate is willing because nan State of Israel will return portion successful deciding to which countries nan LNG is exported from Egypt.

Published by Globes, Israel business news – en.globes.co.il – connected March 28, 2024.

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