Oil and gas producer Energean is spending about $10 million a month to keep its shut-in Israeli offshore operations on standby, and its more than $1 billion Katlan project will be delayed if the Iran war lasts beyond May, its CEO told Reuters.
Mathios Rigas said the suspension was entirely dictated by government security decisions, after U.S.-Israeli attacks on Iran sparked a conflict that has since spread across the Gulf.
"It's not lost revenue. It is deferred revenue," he said, adding that the company has over $300 million in liquidity.
Before the shutdown, Energean produced 15,000 barrels per day of oil alongside gas. Following facility upgrades, production will hit 20,000 bpd upon restart, helping offset deferred income, Rigas said.
The planned May launch of Katlan, which was discovered by Energean in 2022 near two other projects it owns off Israel's coast, will be delayed if the war has not been resolved by then, he said, though there will be no material impact if it ends sooner.
Egypt's Arrears Expected to Decrease
Regional supply squeezes and Egyptian domestic gas shortages mean Egypt, Israel, Jordan, and their neighbours need over 100 billion cubic metres (bcm) of gas annually, Rigas estimated.
Energean has booked capacity to supply 1 bcm of gas annually from Israel to Egypt through a planned pipeline, which remains significantly cheaper than imported LNG.
While Egypt is central to Energean’s growth, it has presented payment challenges.
Outstanding receivables peaked at $250 million, but Cairo recently paid $80 million.
"In tough times, you stick with your partners," Rigas said, urging policymakers to ensure consistent payment schedules. "Pay, baby, pay. That's all."
Egypt's outstanding balance should fall to $60 million to $70 million if the government honours a promised $125 million payment by mid-April, Rigas said. Egypt has said it intends to clear all foreign oil company arrears by June.
To optimise its Egyptian portfolio, Energean aims to merge three concessions - Abu Qir, Northeast Almreya and North Idku - by late June.
Beyond the Mediterranean, Energean recently acquired a stake in a Chevron-operated Angolan offshore oilfield.
While stressing geographic diversification, Rigas cautioned against aggressive expansion amid elevated commodity prices, warning that current conditions make it "not the right time of the cycle for M&A".
(Reuters - Reporting by Reuters; Editing by Joe Bavier)
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