June 25 (UPI) -- A floating production facility is slated to start drilling for natural gas off the coast of Israel by early next year, Energean Oil and Gas said Monday.
Energean said it decided on plans for drilling in the Karish North prospect in the Mediterranean Sea before the end of March. This will be the first of seven efforts outlined in a contract with Stena Drilling. The cost to drill is around $25 million at the high end to tap a prospect with an estimated 200 million barrels of oil equivalent in natural gas and 14 million barrels of light oil.
Mathios Rigas, the company's CEO, said Energean already has 12 contracts to secure gas for the next decade or so.
"The goal of the exploration work is to identify further easy-to-commercialize resources in the region," he said in a statement.
Energean said it would use the $405 million from its initial public offering this year on the London stock exchange to help move forward with a $1.6 billion final investment decision for the Karish and Tanin developments off the coast of Israel.
Israel holds vast natural gas reserves offshore. The Leviathan field, with an estimated 21.5 trillion cubic feet of natural gas reserves, is one of the largest discovered in recent years. In late 2016, the Leviathan partners said they reached an agreement with Dalia, the largest private power plant in Israel, to supply fuel for up to 20 years once production at the field begins.
Energean already has long-term contracts with power producers and industrial companies in Israel. A 55-mile pipeline could connect the floating facility to Israeli coastal infrastructure feeding the domestic grid.
The company awarded French services company TechnipFMC in March with a contract for work offshore Israel. The French company under the terms of the agreement will help with the design, construction and installation of a floating production storage and offloading unit for Karish, with tie-ins to the nearby Tanin field.