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Investing.com -- Energean plc (LSE:ENOG) has signed a transmission agreement with Israel Natural Gas Lines Ltd. for capacity in the new Nitzana pipeline, the company announced Friday.
The agreement allows for the supply of up to 1 billion cubic meters per year for a 15-year period, with provisions for extensions and early termination. The pipeline will connect Ramat Hovav to the Egyptian border in the Nitzana area.
Energean Israel’s 16.4% share of construction costs for the pipeline and compression station is expected to be approximately $100 million.
The company will fund this primarily through a new unsecured $70 million 10-year term loan facility provided by Bank Hapoalim, with the remainder coming from cash on hand.
The Nitzana pipeline is expected to be operational within 36 months after all three parties - Energean, Leviathan and Tamar - sign transmission agreements covering the full capacity of the project.
Mathios Rigas, Chief Executive Officer of Energean, emphasized the importance of regional gas connectivity and long-term energy security in the East Mediterranean region. He noted that while domestic contracts form the foundation of the company’s cash flows, this agreement represents a significant milestone in growing annual gas sales.
The company has also signed a non-binding term sheet with an East Mediterranean client for gas offtake, subject to export permit approval by the Petroleum Commissioner.
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