The delayed floating production, storage and offloading vessel for Energean’s Karish gas project offshore Israel is due to leave Singapore by the end of March, targeting first production in July or August this year.

First gas from the deepwater Karish field was originally slated for the end of 2021, but construction work on the FPSO – which is the responsibility of Technip Energies – has been hit by Covid-related issues, causing the delivery schedule to slip.

Energean chief executive Mathios Rigas said: “The FPSO for our flagship project, Karish, is expected to be ready for sail-away by the end of this quarter” with “first gas by quarter three.”

As of 31 December 2021, the project was about 92.5% complete, said the company in its latest operational and trading update.

Energean noted that a major technical milestone was hit last month.

This involved testing the telescopic design of the FPSO’s emergency flare stack that will allow the vessel to pass under the Suez Canal bridge, avoiding the need to either sail around Africa or install the system in the Mediterranean Sea.

Once the Energean Power FPSO leaves Singapore, the operator expects it will take between four-to-five months to reach first gas, suggesting a start-up date in July or August 2022.

Commissioning and testing of the vessel’s mechanical and electrical systems is underway being done in Sembcorp Marine's Admiralty Shipyard, with final commissioning work to be performed in Israeli waters.

Production volumes, said Energean, depend on the exact timing of first gas, the speed at which its gas buyers in Israel transition away from existing suppliers, and the extent to which extra gas can be sold on a spot basis in the domestic market.

Energean said Karish's three initial production wells are expected to have an immediate ability to ramp up to fill the FPSO capacity which will be 6.5 billion cubic metres per annum.

The vessel capacity will increase to 8 Bcm annually once the Karish North satellite project come onstream in the second half of 2023, with Energean expecting its gas buyers to ramp up to their full annual contracted quantities by the third quarter of 2023.

Two months ago, Energean said it was notified by one Israeli gas buyer - called Dalia - of the latter’s intent to terminate its gas sales agreement (GSA) covering 0.8 Bcm per year, “while also attempting to reserve its rights by claiming that, should the notices be determined to be invalid or wrongly issued, the GSA would not have been terminated.”

Energean said it believes the notices served by Dalia "are invalid and constitute a material breach of contract, giving it the right to terminate the contract.”

The London-listed player has now exercised this right, warning that “if Dalia does not withdraw its notices, the GSA will be terminated and Energean will seek to recover any damages suffered by it as a result.”

The operator said it has identified some incremental buyers for its gas reserves and prospective resources, adding that last month it signed a memorandum of understanding with Egypt’s Egas for the sale and purchase of up to 2 Bcm annually over 10 years, starting with initial volumes of up to half this amount.

Last month, meanwhile, Energean signed an engineering procurement and construction contract with Kanfa covering a second oil train on the FPSO which will almost double it liquids handling capacity to 32,000 barrels per day from 18,000 bpd.

This extra train will allow the vessel to handle production from future satellites in a gas-rich geological play where discoveries usually also contain condensates.

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Rigas noted that 2021 was “an outstanding year for Energean”, with production from its assets in Egypt, Italy and Greece exceeding expectations at 41,000 barrels of oil equivalent per day and its finances bolstered by all-time-high gas prices in Italy.

“As a result,” said the chief executive, “we’ve generated full year revenues of over $495 million and Ebitdax in excess of $200 million.”