Israel in full war mode to double gas exports and expand production

The Israeli government has approved plans to more than double the country's natural gas exports and expand production at the huge Leviathan gas field with the aim of improving energy security and strengthening diplomatic relations. Energy Minister Eli Cohen has approved the export of an additional 118 billion cubic meters (bcm) of natural gas from Eastern Mediterranean reserves. This is more than double the 105 billion cubic meter previously approved. New Med Energy (OTCPK: DKDRF) revealed that its partners Chevron (NYSE: CVX) and Ratio Oil plan to invest 0.4 billion to 0.5 billion dollars in front-end engineering designs and long-term lead items for expansion. Leviathan is one of the world's largest deep-sea gas fields with an estimated 22.9 trillion cubic feet of recoverable gas. This 330-square-kilometer oil field was discovered in 2010/12 by New Med Energy, Chevron, and Ratio Oil. New Med is Leviathan's main operator and holds a 45.3% interest. Chevron holds 39.7% of the shares and Ratio holds 15% of the interests.

According to New Med, Israel plans to gradually expand Leviathan's production volume from the current 12 billion cubic meters per year to 21 billion cubic meters. The group is currently negotiating new contracts to sell gas domestically and internationally. Last year, Israel exported 8.6 billion cubic meters of gas to Egypt in 2023. This was a 39% increase over the previous year, and an additional 2.9 billion cubic meters were exported to Jordan.

Two years ago, Israel, the European Union, and Egypt signed a Memorandum of Understanding (MoU) to increase natural gas exports to Europe. The framework has been hailed as the first to allow Israel to export “substantial” amounts of gas to Europe.

The Middle East has an astonishing 75.8 trillion cubic meters of natural gas reserves (the largest in the world) in this region, which greatly exceeds the 56.6 trillion cubic meters held by the Commonwealth of Independent States (former Soviet Union constituent republic), so it has traditionally been recognized as a global oil and gas powerhouse. However, in recent years, Israel has emerged as a natural gas powerhouse in the Mediterranean, and the country's natural gas reserves have shown an astonishing 40% increase over the past 10 years due to increased drilling and exploration activities. Meanwhile, offshore production has increased fivefold since the Tamar oil field, Israel's first large-scale production site, began operation in 2013. Israel's gas reserves increased from 780 billion cubic meters (bcm) in 2012 to 1,087 bcm at the end of 2022, and 119 bcm were mined during the same period.

The Levant Basin in the eastern Mediterranean has 85 trillion cubic feet (about 2.4 trillion cubic meters) discovered by countries in the same region, including Israel, in the past 20 years, and has emerged as one of the world's most important gas reserves. The gas-rich offshore basin, which spans Egypt, Israel, Cyprus, and Lebanon, is attracting world-class energy companies as Europe works hard to secure alternative supplies of Russian gas.

New Med Energy, Chevron, and Anglo-Dutch petroleum giant Shell (NYSE: SHEL) are also partnering on the Aphrodite gas field. The Aphrodite natural gas field, discovered in 2011, is located about 170 kilometers south of Limassol in Cyprus and only 30 kilometers northwest of Israel's Leviathan gas field. Evaluation wells have already been drilled to confirm evaluations relating to the nature and scale of the Aphrodite gas field, and it is an “important step” towards development. This well is scheduled to function as a production well after completion of gas field development.

“In addition to advancing the second phase of the Leviathan gas field to meet local and regional economic needs, development of the Aphrodite gas field has progressed, and significant progress is being made. “Global demand for natural gas is growing, and large reservoirs like Aphrodite could help meet demand,” New Med Energy CEO Yoshi Abu said.

Not surprisingly, major oil companies have flooded into Israel to claim rights to the country's new natural gas resources. Last year, after BP (NYSE: BP) and Abu Dhabi National Oil Company (ADNOC) announced they had agreed to establish a joint venture to acquire 50% of Israeli exploration company shares for 2 billion dollars, New Med's stock price rose more than 60%. Unfortunately, the two companies announced in 2024/3 that they would suspend the deal as the war between Israel and Hamas continues. Experts have previously warned that the death toll in Gaza is reported to be over 0.03 million, and the sharp rise in civilian casualties could make it politically impossible for both companies to proceed with the business.