Energean Plans for Israel and the East Med

In an interview, Energean CEO Mathios Rigas tries not to talk about politics, relates what brought Energean to Israel’s economic waters, and criticizes the European countries for their behavior before the energy crisis broke out with the Russian invasion of Ukraine.
What is your policy on disputed areas?
“Energean only operates where the government allows. And so, even though we’re a Greek company, we don’t drill in the areas disputed by Turkey.”

From selling books, via banking, to gas exploration
Rigas was born in Greece and studied energy engineering in Athens, followed by a second degree at Imperial College, London. Not finding work in his profession straightaway, he made a living selling books on the street. He then switched to banking, working at an international bank in London. There he learned the secrets of the money markets, raising capital, credit, and so on. “These qualifications, of an energy engineer together with understanding of the financial markets, are the basis of everything I did later,” he explains.
In 2000, Rigas returned to Athens, and opened a fund investing in local startups, but he was too early, and the fund closed. Four years later came the turning point. Greek oil company Prinos was looking for a manager and investor, and Rigas got the job. He founded Energean in 2007 on the basis of Prinos, with $100 million that he raised from US investors. At that stage, he decided that Energean would focus on natural gas.
Rigas came to Israel because of the nuclear agreement between the powers and Iran in 2015. “The agreement brought most of the major companies to Iran, and I decided to come to Israel. I couldn’t compete with the big boys in Iran. So I looked for somewhere where I could compete. And then, Israel opened up the market to competition, and forced Delek to sell some of its licenses and gas fields. No less importantly, I understand the Israeli temperament. The potential of the East Mediterranean was also an attraction.”
How did you win the tender in Israel?
“For Karish, we competed with Edison (a company that Energean acquired three years ago) Edison demanded a minimum price per MMBtu after production, and we didn’t. I took the risk. They said, ‘You’re crazy, Israel is a tough country, and there’s bureaucracy,’ but I found the Israeli government to be professional, and it helped with everything.”
Rigas says that his company invested $2 billion in Israel, and that the result of the cooperation on the government’s part “is that the price of natural gas in Israel is the lowest in the world.”

“We avoided positioning the production platform in view”
Rigas is cautious when it comes to internal disputes in Israel over natural gas. On that issue, he says that “in 2018 we decided to bring the production platform to deep waters, out of understanding of the Israelis’ dissatisfaction with having such platforms in front of their eyes (the Leviathan gas platform).”
What’s the price of the gas in the contracts with Israel?
“Just over $4 per MMBtu. Almost all the customers are the private power plants. With the Israel Electric Corporation we only have an in principle purchase agreement for when there will be reserves.” Energean is not at present taking advantage of the potential for exports at a higher price, and so they are looking at new discoveries.
“The discovery of the Athena reservoir in Block 12 (an area called Olympus between Karish and Tanin) is currently under discussion. To whom should we sell? The possibilities are Cyprus, Egypt, or Israel. The secret of commercial capability is the existence of production and transport infrastructure, and that is the aim of the new platform.”

30,000 barrels of oil daily from Karish
As a secondary product, the gas fields produce oil, with the Karish reservoir expected to produce 30,000 barrels a day. That will be the first maritime oil production in Israeli territory.
Rigas announced this year that the company was planning to invest $710-760 million in developing and in exploration and production drilling, of which $450-500 million would be invested in Israel. “We’re considering drilling in areas 21 and 31 (east of Tamar) that are in our concession,” Rigas now says. “We’ll decide shortly. Until you drill, you don’t know. Our goal is to double the 100 BCM we have in the Karish, Karish North, and Tanin reservoirs. It will come with the 58 in Olympus, and we hope for over 40 more in the new blocks.”
Rigas is full of criticism of the European leadership, which he says is to blame for the energy crisis on the continent. “They made a huge mistake in becoming dependent on the Russian gas, and reducing their own production. They got into a green paranoia,” the Energean CEO says accusingly. “They halted oil and gas exploration, and thought they would immediately switch to green energy. They shut down nuclear power stations, and made Russia dominant in gas supply. That’s populistic policy making and a denial of reality.”

The big money lies in exports
What should attract companies to drill in Israeli economic waters?
“Certainty that Israel has enough to secure its domestic consumption for the next 30 years; competition must continue; and yes, the possibility of exporting, because that’s where the big money is.”
There is, however, still no efficient way of transporting gas to Europe in large quantities. On that, Rigas says, “You have to take into account geopolitics and regional economics. The pipeline to Egypt looks easier. Another possibility is a pipeline to the liquefaction installation in Cyprus, but that takes time.” The quick solution is a liquefaction ship. “It has to be in protected waters close to shore, and there’s opposition to that in Israel. If not here, then in Egypt or Cyprus.”