Energean work in Singapore and Israel progressing

The FTSE 250 company said that on 2 June, the Sembcorp Marine Admiralty Yard in Singapore reopened.

It said preparation works for lifting of the topside modules of the Energean Power floating production, storage and offloading (FPSO) vessel had commenced, and an application was submitted to the Singapore Economic Development Board for the return of up to 529 workers for the Energean Power project.

The ramp-up of the workforce, currently expected over the course of June, would be dictated by the Singaporean authorities' ongoing evaluation of the Covid-19 situation.

“The forward work programme on the FPSO is contingent on the evolution of the global pandemic and decisions of the Singapore authorities,” the board said in its statement.

It added that before any further effects of Covid-19, the key FPSO activities that were required to achieve first gas included topsides integration and commissioning activities in Singapore, which was expected to take around 10 months.

Following that, the FPSO would be towed to the Karish field in Israel, with mooring, hook-up and commissioning happening subsequently, which was expected to take up to four months.

“The health and safety of its workers remains of paramount importance to Energean and it supports all necessary measures to prevent further transmission of Covid-19.

“Energean does not expect the revised timetable to have a material financial impact on the company due to the contracting structures that it has in place with its main contractor and its gas buyers.”

In Israel, meanwhile, Energean said the pipelay vessel Solitaire and construction support vessel Normand Cutter arrived offshore in May.

The near-and-onshore pipeline installation had now been completed, and laying of the remaining 80 kilometres of gas pipeline that would deliver gas from the Energean Power FPSO to Israel had now started.

Core installation using the Solitaire was expected to be completed by the end of June.

The full pipeline installation and pre-commissioning programme was expected to be completed in the fourth quarter, “well within” the project schedule.

“Installation of the subsea equipment at the Karish field is progressing in line with expectations,” the board said.

“Installation of the manifold and subsea isolation valves is ongoing and is expected to be completed by the end of June.

“Installation of the three sets of risers that will connect the three producing wells to the FPSO is expected to commence in the fourth quarter of 2020, and to be completed in the first quarter of 2021.”

On the commercial front, Energean said that following a competent person’s report of Karish North resource volumes issued by its independent reserves auditor, Energean Israel had converted a further 0.6 billion cubic metres of gas sales and purchase contracts per year from contingent to firm.

Energean Israel's firm contracts were now expected to deliver sold volumes of 5.6 billion cubic metres per year on plateau, or around 75% of its independently-verified resource base.

“The competent person’s report enables Energean to continue marketing its gas resources into the growing Israeli domestic market and regional export markets, with the aim to secure additional long-term cash flows and fulfil its goal of filling the eight billion cubic metres per year capacity of its FPSO,” the board said.

“All of Energean's Karish gas sales and purchase agreements contain take-or-pay and floor pricing provisions, which reduce the risks on Energean's cash flow generation profile on the Karish project and limit Energean's exposure to global commodity price fluctuations.”

At 0833 BST, shares in Energean were up 0.35% at 577p.