Exxonmobil is offering to build Israel a floating LNG gas-ship to export from the Leviathan gasfield and thus bypass Egypt’s planned LNG export facility.
An Exxonmobil representative told various financial media that the company is still considering its options. Other sources cautioned that it is entirely likely no agreement will be reached.
Despite considerable gas discoveries in the Eastern Mediterranean region over the past decade, viable export routes have been hard to find. This has put off global energy firms. The Leviathan partners have signed deals to meet surging demand in Egypt, Jordan and Israel, but haven’t yet found a way to export to Europe or East Asia.
Leviathan is a deep water find of about 600 bcm of gas. It is considered the biggest underwater gas discovery in a decade. Partners developing the project are focused currently on lining up export deals and finding ways to reach markets outside of the region. Delek Drilling, the biggest shareholder in the Leviathan field, is looking at several options, including buying a stake in one of Egypt’s LNG sites.
The talks with Exxon are the latest sign that an unofficial energy boycott on Israel, imposed by leading Arab countries, is fading. Energy majors that partner with big Arab firms have hesitated to do business with Israel in the past, for fear of risking ties with states that control some of the world’s biggest energy reserves. These are countries that have been hostile toward Israel until now.
Those concerns seem to be dissipating. Israel and Persian Gulf states have found common cause against Iran, leading some Arab leaders, such as Saudi Crown Prince Mohammed Bin Salman, to break longstanding diplomatic taboos on Israel. Covert trade with the Arab world, mainly involving Israel’s technology sector, also has grown.
For Exxonmobil, expanding into Israel and Leviathan LNG would reflect the company’s growing ambitions in the East Med, an area that straddles Egyptian, Israeli, Lebanese and Cypriot waters. Exxon established a foothold in the region in February, when it found an offshore reservoir in Cypriot waters that’s about one-third the size of Leviathan.
Exxon recently spoke with Israeli Energy Minister Yuval Steinitz about participating in an upcoming tender for new offshore drilling blocs, according to people familiar with the matter.