Regional Conflict Halts Leviathan Pipelay: Chevron’s Suspension
The ongoing regional conflict has prompted Chevron Mediterranean to suspend installation activities related to the third subsea gas export pipeline from the deepwater Leviathan field, located offshore Israel. This move was announced on October 6, 2024, and is attributed to the recent escalation in the security situation in the region.
The third subsea pipe-laying project aims to expand Leviathan’s gas supply capacity from the current 1.2 billion cubic feet per day (Bcf/d) to approximately 1.4 Bcf/d. The project was initiated in July 2023 with the goal of increasing Israel’s daily natural gas supply by 0.2 Bcf. The pipeline is being laid about 120 kilometers west of Haifa and is designed to convey gas to the production rig located approximately 10 kilometers offshore from Dor Beach.
Due to the suspension, the completion of the project now faces a delay until April 2025. This timeline is contingent upon various factors, including the contractor’s project schedules and the prevailing regional security situation at the time. NewMed Energy, a partner in the Leviathan gas field with a 45.34% stake, has informed the Tel Aviv Stock Exchange (TASE) that Chevron’s decision to halt work will postpone the project’s start date, affecting gas exports while ensuring reliable domestic supply.
The delays in the third pipeline project are expected to result in decreased gas for export, although domestic consumption remains unaffected. In 2023, Israeli natural gas consumption rose to 24.7 billion cubic meters (BCM), with 13.1 BCM used domestically and 11.6 BCM exported. The export figures saw a significant 21% increase from previous years, with 75% of gas exported to Egypt and the remainder to Jordan. The Leviathan field produced 11.1 BCM in natural gas last year, primarily supplying the domestic economy and 78% of Israel’s gas exports.
NewMed Energy has emphasized that the current production interruptions due to operational and technical considerations but not substantial in volume relative to annual production, will not significantly impact the total value of the partnership’s discounted cash flow from the Leviathan project. However, it is expected to have a material negative cumulative effect on the expected cash flow in 2025.
Chevron’s precautionary measure underscores the importance of upholding safety protocols during periods of heightened regional tension. The