Houston-based Noble Energy’s first deal to export natural gas from Israel shows that nearby Middle Eastern countries may be the most lucrative market to sell massive reserves of the Leviathan offshore field.
Analysts praised the independent oil and gas producer’s deal announced Jan. 6 to provide 4.75 Bcf/y to a Palestinian power company over two decades, once production begins in late 2017.
Noble “can actually make better returns selling gas to Palestine and Jordan than exporting gas to Europe, because the upfront investment is minuscule in comparison,” Fadel Gheit, an analyst with Oppenheimer & Co. told the Houston Chronicle. “It would take only a few miles of pipeline to send gas to Jordan, a fraction of the cost” of building liquefied natural gas (LNG) export facilities, he said.
It was the first time Noble and its Israeli partners have signed a deal for any amount of gas from the field with reserves of 19 Tcf gas.
The price tag of the Palestinian deal implies Noble got a higher price than expected — about $7.15 per 1,000 cubic feet — analysts with Tudor Pickering Holt & Co. wrote Jan. 6. Gas has become “the fuel of choice” in Israel as new independent power producers have come online and local distribution companies have grown, doubling the number of Noble’s customers since last year, said Keith Elliott, a senior vice president for the company.