Energean inks transmission agreement with Israel Natural Gas Lines

(Sharecast News) - Exploration and production Energean's Israeli subsidiary has signed a transmission agreement with Israel Natural Gas Lines for capacity in the Nitzana pipeline, in line with its strategic focus on long-term value creation. Energean said the Nitzana pipeline was a new onshore pipeline that will be built from Ramat Hovav to the border with Egypt in the Nitzana area.

The agreed terms were for the supply of up to one billion cubic meters of natural gas per year for a 15-year period, with provisions for extensions and early termination, and also include rights, during the construction phase, to access available capacity in the Jordan-North pipeline.

The FTSE 250-listed firm said Nitzana was expected to be operational no later than 36 months after all three parties sign transmission agreements covering the full capacity of the project.

Energean Israel's 16.4% share of the pipeline and compression station's construction costs were expected to be approximately $100m, and will primarily be funded via a new unsecured $70m, 10-year term loan facility provided by Bank Hapoalim. Following an initial 40% downpayment, the balance will be paid according to construction milestones via drawdown under the unsecured term loan and cash on hand.

Energean also noted that it has already signed a non-binding term sheet with an East Mediterranean client for the offtake of its gas.

Chief executive Mathios Rigas said: "Energean is well positioned as a key regional player, and we remain focused on advancing all export opportunities from our Israeli assets, in the best interests of our shareholders, the Israeli gas market, and the region.

"Although the bedrock of our cashflows is from our long-term domestic contracts, the signing of this agreement marks an important milestone to drive growth in our annual gas sales."

Reporting by Iain Gilbert at Sharecast.com