A 200-kilometre pipeline that could export gas from Energean Oil & Gas' assets off Israel to Cyprus has an estimated cost of about $350 million, according to chief executive Mathios Rigas.

Energean has two gas fields under development off Israel — Karish Main and Tanin — with the bulk of these resources set to be sold to markets in Israel.

However, if the company discovers additional gas then exports to Cyprus would be an option.

Rigas late last week told analysts that Energean would "obviously have to drill more wells and find more resources" to satisfy the requirements of this pipeline export proposal, above and beyond its gas sales commitments with Israeli buyers.

The London-listed operator has already “engaged in the process to apply for a licence to lay a pipeline to Cyprus”, said the chief executive.

He said the maximum capacity of the Cyprus pipeline would be 1 billion to 1.2 billion cubic metres per annum, while its estimated cost would run to about $300 million to $350 million.

However, Rigas cautioned that "we would look to work with others" when investing in the export line because "we are not a pipeline operator".

Energean has already signed a letter of intent to develop the pipeline project with VTTI Cyprus, which is owned 50% by Vitol and 50% by the operator of the Vasilikos Bay terminal in Cyprus.

Another LoI covering gas supplies has been signed with private electricity producer Power Energy Cyprus, with two other LoIs also agreed with unnamed independent power producers.

In addition, Energean has received an expression of interest regarding gas purchases from another private electricity producer in Cyprus.

Rigas said the proposed pipeline project would compete with a plan to establish a floating storage and regasification unit at Vasilikos.

If this gas export scheme moves ahead, market sources suggested that because of the water depth along the proposed route — perhaps more than 2300 metres — only the likes of Allseas and Saipem would be able to install the pipeline.

Karish Main and Tanin will be exploited via the Energean Power floating production, storage and offloading vessel, which is due on stream in the first quarter of 2021.

TechnipFMC, which has been carrying out study work on the Cyprus gas pipeline, has a $1.38 billion engineering, procurement, construction, installation and commissioning contract for the FPSO, the total total capacity of which will be 8 Bcm per annum.

The hull is being built at Cosco’s Zhoushan yard in China while Sembcorp Marine is fabricating the topsides at its Admiralty yard in Singapore.

The floater is expected to also host production from Energean's recent Karish North gas discovery.

Karish North in April was unveiled as a discovery with an estimated gas-in-place resource of between 28.3 Bcm and 42.45 Bcm of gas.

However, in its second quarter results statement, the operator said initial analysis suggests the find has a higher liquids content than originally expected.

“Further evaluation is currently being undertaken to further refine both the resource potential and liquids content of the discovery,” it added.

Energean said a $10 million sidetrack well will be spudded by drillship Stena DrillMax before the end of this year with the aim of taking the final investment decision on the asset's development “in the near-to-medium term".

Stena DrillMax is drilling three development wells on Karish Main, two of which have been completed.

Energean said the results of these probes are “positive”, with downhole sampling suggesting that the main field’s key reservoir sands also have a higher condensate ratio than envisaged.

Meanwhile, onshore Greece, Energean reported that a 2D seismic survey was completed this month on the Repsol-operated Ioannina block, with the operator applying for a one-year licence extension until October 2020. It is estimated that the licence’s preliminary prospective resources are between 640 million and 800 million barrels of oil held in four leads.

At the Aitoloakarnania licence onshore Greece, a tender for 2D seismic acquisition has been issued with the programme expected to commence in early 2020.

Off Greece, development drilling at the company’s Epsilon field hit oil in two deeper sands, with the development plan being updated to include these new data.

First oil from Epsilon and its new platform is due to flow in 2020 as a tie-back to Energean's legacy Prinos field complex.

In Montenegro, processing and interpretation of recently acquired 3D seismic data over the operator's acreage is ongoing with results due by the end of 2019.

Meanwhile, Energean’s $850 million acquisition of Edison E&P remains on course for completion by the end of the year.

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Energean fleshes out plans for gas pipeline