NewMed FLNG Terminal

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NewMed FLNG Terminal, also known as Leviathan Phase 1B, is a proposed floating LNG export terminal in Israel.

Location

The FLNG's exact mooring location remains to be determined. However, in 2023, Yossi Abu, chief executive of NewMed Energy mentioned that the terminal would be built close to the Leviathan platform, about 10 km from the shore of Dor, Israel.

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Project Details

• Operator:
• Owner: NewMed Energy (45.3%), Chevron (before Noble Energy; 39.7%), Ratio Energies (15%)
• Parent company: NewMed Energy, Chevron, Ratio Energies
• Location: Near the Leviathan platform, about 10 km from the shore of Dor, Israel
• Coordinates: 32.614, 34.808 (approximate)
• Capacity: 5 mtpa (7 bcm/year)
• Status: Proposed
• Type: Export
• FID Status: Pre-FID
• Start Year:
• Cost: US$435 million

Note: mtpa = million tonnes per year; bcm/y = billion cubic meters per year

Background

In August 2019, Israeli energy company NewMed Energy, then known as Delek Drilling, announced agreements for negotiating engineering services for a floating liquefied natural gas (FLNG) facility offshore Israel for gas from the Leviathan gas field. Delek is developing the basin offshore Israel, which has estimated resources of 21.3 trillion cubic feet (Tcf). It’s a joint venture with U.S. independent producer Noble Energy (39.66%) and Israeli firm Ratio Energy (15%). The project will allow Israel to become a gas exporter, according to researchers. The joint venture is negotiating with Belgian maritime service provider Exmar and Bermuda-based shipping company Golar LNG to enter into a binding long-term charter agreement with the winner to finance, build, operate and maintain the facility. The Flng terminal will process between 2.4 and 5 million tons per year of natural gas, to then be shipped worldwide via LNG vessels.

In February 2021, Energy Voice reported that Delek Drilling was continuing to discuss potential collaboration with Exmar, although talks with Golar LNG had ended, and that the company was seeking to hire LNG expertise.

In February 2022, Delek Drilling rebranded itself as NewMed Energy and released a new strategic plan including increasing its exposure to the LNG market.

In February 2023, NewMed Energy and partners Chevron and Ratio Energies announced that they would be dedicating US$51.5 million to the preparation of the Leviathan LNG facility. They also agreed to spend US$45 million to expand the field's production. Yossi Abu, chief executive of NewMed, announced that the FLNG terminal would have an annual capacity of 7 billion cubic meters per year. NewMed and the company's partners also announced that they were expecting to agree on a final investment decision (FID) as soon as possible, and that it would take at least three years after FID to begin gas exports to Egypt and FLNG operations.

After the start of the Israel-Hamas war, concerns were raised about the conflict's effects on Leviathan Phase 1 Project (NewMed LNG terminal). The rising costs of the facility, which as of November 2023 had a budget of US$435 million, have also elicited concern among the project's stakeholders. Moreover, according to an article published in November 2023 by mees.com, "the planned facility would be more than 25% larger than the world’s current largest FLNG," so partners in the project have considered options like mooring the facility over the reservoir, possibly to involve a smaller capacity FLNG terminal.

In March 2024, Israel's Minister of Energy and Infrastructure "instructed an examination to be conducted of the options for building a floating liquefied natural gas (FLNG) facility in Israel's economic waters," to provide an additional route for the country's LNG exports. For such an investment, the Leviathan partners would push for the approval of a production and export plan that would ensure a return on investment. This plan would most likely include an expansion of use of Egypt's facilities and a "stand-alone LNG facility in Israel."

Israel's gas use and reserves

As of 2017 natural gas provided 70% of Israel’s electric power. Most of it was imported, particularly from Egypt, through the Arish-Ashkelon pipeline.

Israel's demand for imported LNG began in 2011 following the disruption of Egyptian supplied gas and the depletion of the offshore Yam Tethys reservoir.

The country, however, began moving to develop its domestic reserves after 2011. Israel’s known gas reserves were 30 trillion cubic feet. The United States Geological Survey (USGS) in 2013 estimated at least twice as much could be had offshore that count meet Israel’s energy needs for the next 30 to 50 years. Reuters reported in 2013 that the USGS predicts the greater eastern Mediterranean’s Levant basin could hold up to 122 trillion cubic feet of recoverable gas. This would make it one of the world’s largest gas deposits.

In 2010 Israel had declared it would use its natural gas reserves to power cars and trucks, but according to a 2017 study by the Samuel Neaman Institute for National Policy, the country had done little to meet this goal.

As of 2014, Israel produced over 7.5 billion cubic meters (bcm) of natural gas a year, and only exported to Palestinian territories.

In 2009 and 2010, two major offshore gas deposits, the Tamar and Leviathan fields, were discovered. However, although reserves amounting to almost 900 billion cubic meters were found, the exploitation of these resources was delayed by regulatory uncertainty until around 2017, when a final investment decision for the development of the initial phase of the development plan for the Leviathan field was reached.

In August 2017 Haaretz reported that Egypt could open up its markets to Israel gas. In early August 2017 Egyptian President Abdel Fattah al-Sissi signed legislation forming a gas regulatory authority and permitting private companies to import gas. In 2020, Israel began importing gas to Egypt through the Arish-Ashkelon pipeline.

Even though Israel was historically almost entirely dependent on oil and gas imports, the discoveries of the Tamar and Leviathan fields have allowed the country to become more independent by shifting its economy to rely on its domestic gas reserves. In 2023, the estimated gas reserves for Israel were 1,087 billion cubic meters. This has allowed Israel to become an energy exporter, primarily to countries like Jordan, Lebanon, and Egypt.

War in Ukraine and European energy crisis

During 2022 and 2023, European energy markets shifted as as result of the war in Ukraine, creating opportunities for countries in the Middle East to develop gas and oil export projects to meet growing European demand for energy. Although Israel's deposits are large for the country, they're small compared to European demand; therefore, because of the relatively small quantities of gas available in Israel, the difficult topography of the Mediterranean, and the geopolitical complexities of the maritime borders in the region, exporting gas from Israel to Europe has historically proved to be too expensive and inefficient.

However, with rising demand from Europe, Israel and neighboring countries like Cyprus have been looking at LNG as an alternative to export gas to Europe while ridding themselves of the geopolitical complexities of constructing pipelines. One of the cheapest and most efficient way for Israel to export gas to Europe is through existing terminals in Egypt (Idku and Damietta). However, other projects like a land-based LNG export terminal in Cyprus, a proposed LNG export terminal in Israel, and the EastMed Pipeline are additional alternatives to export gas to Europe.

Middle East and LNG imports

Israel is not the only country rich with gas reserves in the Middle East to import gas. Countries in one the most gas rich regions import LNG by tanker. They include Mina Al-Ahmadi LNG Terminal in Kuwait in 2009, Jebel Ali FLNG Terminal in Dubai in 2010, Hadera LNG Terminal in Israel in 2013, Jordan through Aqaba Jordan LNG Terminal in 2015, Ruwais LNG Terminal in Abu Dhabi in 2016. The city of Sharjah in the United Arab Emirates plan to import LNG in 2018. Bahrain plans to import LNG through its Bahrain Hidd FLNG Terminal in 2019. It was reported in 2017 that even Saudi Arabia is considering LNG imports.