Israel's government on Thursday approved the development of the controversial Leviathan natural gas field that will give Israel a second source of gas supply while potentially turning it into a gas exporter.
Leviathan, one of the largest offshore discoveries of the past decade, was found off Israel's Mediterranean coast in 2010. It has an estimated 622 cubic meters of natural gas (BCM) of reserves and is expected to become operational in 2019.
Texas-based Noble Energy, which holds a 40 percent stake in Leviathan, said the field would initially start production at 1.2 billion cubic feet a day and expand to 2.1 bcf.
"Leviathan is expected to provide a second source of supply and entry point into Israel's domestic natural gas transport system, while also delivering exports to regional countries," Noble said in a statement.
The site, however, will cost at least $5 billion to develop and it was not yet clear how the project will be financed.
"Strong momentum on the regulatory and marketing fronts represents major steps in advancing the Leviathan project towards final investment decision," said J. Keith Elliot, Noble's senior vice president for the Eastern Mediterranean.
Earlier this week, Leviathan signed a deal to supply up to 473 bcf to a new private power plant, IPM Be'er Tuvia, for 18 years. Noble estimated gross revenue from the deal at $2.5 billion.
In January Leviathan signed a $1.3 billion gas supply contract with Edeltech, Israel's largest private power producer.
Last week Israel's government approved a revised deal aimed at fast-tracking development of Leviathan, which has been mostly earmarked for exports.
The Leviathan project hit a major obstacle in March when Israel's Supreme Court blocked a previous agreement between the field's shareholders and the Israeli state, the terms of which would have stayed unchanged for 10 years.
It had been opposed by opposition parties and public advocacy groups on grounds that Noble and its partner Delek Group - which also own the adjacent Tamar field - would control too much of Israel's natural gas supply.
Tamar began production in 2013 and provides Israel with its current natural gas needs. (Reporting by Steven Scheer, editing by William Hardy)
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