The energy companies NewMed Energy and Ratio Energies formalized a commercial agreement with Dalia Energy Companies for the supply of natural gas from the offshore Leviathan field. This agreement, or Leviathan project, provides for supplying two new power generation plants using combined-cycle turbines, located in the towns of Ashdod and Tzafit. Each of these facilities will have an approximate installed capacity of 850 MW.
Details of the Leviathan project and the supply volume
Based on the contractual clauses, the suppliers undertake to firmly deliver an initial volume of up to 1.3 BCM per year of natural gas. Subsequently, in a period between January 2034 and July 2035, the delivery volume will increase to approximately 1.7 BCM per year. The start of supply operations is scheduled for January 1, 2030, establishing a term of twenty years from the start of the plants’ commercial operation.
Therefore, the buyer assumes the payment obligation under the commercial take-or-pay arrangement for a specified minimum annual quantity. This structure ensures a steady flow of demand and protects the developers’ investment against unforeseen market fluctuations.
Financial projections and price indexation
Regarding the economic impact, the developers estimate that the contract will generate cumulative gross revenues of approximately $6.7 billion over the two-decade term. Of this total, NewMed Energy’s share stands at 75.14%, representing estimated revenues of around $5 billion. The agreed pricing mechanism is directly indexed to the general electricity tariff in the local market.
Likewise, the contract stipulates a technical review window starting in October 2041, allowing both parties to renegotiate the price with a maximum variation limit of 10%. If no consensus is reached in that review, the requesting party retains the right to reduce the daily contractual quantity by up to 30%. Additionally, the buyer has a one-time option to align this pricing mechanism with a pre-existing contract signed in May 2024.
Finally, final execution of the contract remains subject to obtaining approvals from the Competition Authority and the creditor banking entities. The clauses also specify strict deadlines for the financial close of the Ashdod facility, setting cut-off dates in June and December 2027. Failure to meet these deadlines will grant the sellers the authority to reduce the allocated gas volume by up to half of the contracted capacity.
Source and photo: NewMed Energy