London-listed Energean has firmed up a new schedule for bringing its Karish gas project online offshore Israel after the termination of one of its gas purchase contracts raised questions about project timing.

In its latest consolidated financial report, Energean said it is targeting mid-2022 for the project to start shipping first gas from the Mediterranean Sea project.

Energean's push to bring the Karish development on stream - albeit after its original late 2021 start-up date - was spurred forward by the successful placement of a $2.5 billion corporate bond in Israel in March.

The schedule is based on the sailaway of the Karish floating production, storage and offloading vessel from Singapore during the first quarter of next year, a 35-day transit to Israel, and a three-month hook-up and commissioning process.

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The FPSO was 91.5% complete as of 31 July and at the end of August there were more than 1700 people working on the vessel in Singapore, Energean said.

According to analysts from Berenberg Research, two contracts for the supply of about 1 billion cubic metres per annum, or about 14% of the Karish total initial contract annual commitment of 8 Bcm of gas, could need to be replaced.

A spokesperson for Energean confirmed only one of these contractual terminations, but acknowledged that a second had been at risk.

He stated: "Energean has identified alternative buyers and routes to market for these volumes, and expect to be able to sell all gas reserve volumes profitably."

The purchase setback took some of the gloss off otherwise strong financial results for Energean in the first half of 2021, the analysts said.

Energean said its revenues jumped to $206 million between January and June, compared with just $2 million in the first half of 2020, following the acquisition of producing assets of UK-based Edison E&P in Egypt, Italy, the UK and Croatia.

Revenues were also boosted by Energean taking full control of Karish and Tanin offshore developments in Israel last year.

Energean's net after-tax loss narrowed to $35.7 million, versus $77.5 million in the corresponding period of 2020.

$2.5 billion bond

The Israeli bonds have to be redeemed between 2024 and 2031.

The Karish project is set to hit a plateau production target in 2025, but this has been adjusted back to 7.2 Bcm per annum, pending new gas deals.

The company ended the reporting period with cash in hand of more than $1.1 billion and gross debt of $2.8 billion, up 97% on the corresponding period of 2020.

Coupled with credits facilities arranged in Egypt and Greece, average debt maturity for Energean jumped to about six years by 30 June, from approximately 2.5 years one year ago.

Available cash and credit lines are set to facilitate Energean’s near-term plans to proceed with long-planned exploration drilling of up to five offshore wells near Israel and to invest into other upstream projects and carbon intensity reduction measures.

The drilling rig Stena IceMax, which was contracted earlier last year, is set to begin exploration drilling operations offshore Israel in the first quarter of 2022, Energean said.

(This article has been corrected to reflect net income of Energean plc's activities. An earlier version of the article referred to the net income of Energean Israel Limited. The previous version wrongly included Malta as one of the sources of the company's producing assets and stated incorrectly that a second gas sales contract has been cancelled).