Energean warns: Long-term conflict could delay $1 billion natural gas project

Oil and gas producer Energean’s CEO told the media that the company spends about $10 million per month to keep its shut-down offshore Israel operations on standby. If the war with Iran continues beyond May, the $1 billion-plus Katlan project will be delayed.

Mathios Rigas stated that after the US and Israel launched attacks on Iran, leading to conflict spreading throughout the Gulf region, the shutdown was entirely a government security decision.

He said, “This is not a loss of revenue, but a delay in revenue.” He added that the company has over $300 million in liquidity.

Rigas said that before the shutdown, Energean produced 15k barrels of oil and natural gas daily. After facility upgrades, the restarted production is expected to reach 20k barrels per day, helping to offset deferred revenue.

He stated that the Katlan project is scheduled to start in May—discovered by Energean in 2022 near two other projects off Israel’s coast. If the war has not ended by then, the project will be delayed; but if the war ends early, there will be no substantial impact.

Egyptian debt is expected to decrease

Rigas estimates that regional supply tightness and domestic natural gas shortages in Egypt mean that Egypt, Israel, Jordan, and neighboring countries need over 100 billion cubic meters of natural gas annually.

Energean has booked capacity to supply 1 billion cubic meters of natural gas from Israel to Egypt each year via a planned pipeline, which remains much cheaper than importing liquefied natural gas.

While Egypt is crucial for Energean’s growth, the country also presents payment challenges.

Unpaid receivables once reached $250 million, but Cairo recently paid $80 million.

Rigas said, “In difficult times, you stand with your partners.” He urged policymakers to ensure stable payment schedules. “Payments, baby, payments. That’s all.”

Rigas stated that if the Egyptian government fulfills its promise to pay $125 million by mid-April, Egypt’s outstanding balance should decrease to $60-70 million. Egypt has indicated plans to settle all foreign oil company debts before June.

To optimize its asset portfolio in Egypt, Energean aims to merge three license blocks—Abu Qir, Northeast Almreya, and North Idku—by the end of June.

Beyond the Mediterranean, Energean recently acquired part of the offshore Angola oil field operated by Chevron.

While emphasizing geographic diversification, Rigas warned against aggressive expansion during high commodity prices and pointed out that the current environment “is not the right time for mergers and acquisitions.”