US Firm Wins Israel Offshore Gas Contract
Houston-based engineer Wood Group Mustang has won the first major contract to develop Israel’s huge Leviathan offshore natural-gas field. The $120-million front-end engineering-and-design award follows government approval last month of a new development plan with the field’s U.S.-Israeli developers. Work halted in March, when an Israeli court rejected a key provision of a previous plan for Leviathan, which has up to 621 billion cubic meters of gas set for domestic and export markets.
Development includes drilling eight production wells, set to be linked to an offshore production platform and transported by undersea pipeline to two entry points along Israel’s central Mediterranean coast. The platform has a planned capacity of 21 billion cu m per year, of which 9 billion cu m would be exported via pipeline to neighboring markets.
Noble Energy Inc., Houston, and Israel’s Delek Group have said they expect to make a final decision to develop Leviathan in the fourth quarter. The companies believe the field could begin production in late 2019 and are “advancing negotiations” with domestic and export customers, said a Delek executive. The firms and the government still are negotiating the plan’s “stability clause,” which stipulates how the project and its developers would be regulated over the next decade and which was rejected by the court.
The project got a boost in late June, when Israel and Turkey agreed to restore relations following the 2010 Israeli naval raid against a Turkish ship that was trying to evade the Israeli blockade on the Palestinian-controlled Gaza Strip. Companies from both nations now can negotiate building an estimated $2-billion marine pipeline from Leviathan to Turkey, which wants to diversify its energy sources.