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Shell in talks to pump gas to LNG plant

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LNG Industry,

According to the latest Bloomberg report, Royal Dutch Shell Plc is seeking creative solutions to bring gas from Israel and Cyprus to market, a step that could help turn the Mediterranean region into a major gas-producing hub.

Shell is in talks to buy natural gas from Israel’s Leviathan field, combine it with output from Cyprus’s Aphrodite field, in which it owns a 35% stake, and pump it to a LNG plant in Egypt.

Combining output from the fields, which share some major investors, could potentially improve the economics of the projects. Leviathan’s partners, led by Noble Energy Inc. and Delek Drilling LP, are looking at various shipment options as they face an estimated development cost of US$3.75 billion. The partners would have to seek further funds to increase the field’s capacity if they do the deal with Shell.

Noble Energy Inc. remains in negotiations to supply natural gas to LNG plants in Egypt and to the Egyptian market.

Deliveries to Egypt would be piped to Shell’s Idku LNG plant on the country’s Mediterranean coast. Egypt was a net exporter of LNG until 2014, when declining output and power shortages resulting from political upheaval forced it to divert fuel for its own use. 

The neighbouring Cypriot government is also looking to develop its gas industry. Building FLNG terminals to evacuate the fuel may be an option for the country if regional politics make pipelines non-viable.

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