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About 75km off the coast of northern Israel sits a vessel once targeted by Hizbollah, and now guarded by two Israeli warships, tasked with ensuring the lights stay on in Israel during the war against Hamas in Gaza.
The giant floating production facility is the primary asset of London-listed Energean, which started producing natural gas from the Karish field last year.
Although a relative minnow in the oil and gas industry, Energean “has been providing at times up to 60 per cent of all of Israel’s gas demand” from Karish since the October 7 massacre of about 1,200 Israelis by Hamas, the company’s founder and chief executive Mathios Rigas said.
“We had to produce to keep the lights on in Israel . . . ‘just keep the gas flowing’ was the message, so we went to maximum capacity,” Rigas told the Financial Times.
The responsibility was thrust upon Energean after the Israeli government ordered a temporary shutdown of the Chevron-operated Tamar gasfield, which normally meets about 70 per cent of the country’s energy needs.
Tamar’s production platform, visible from the north of the Gaza strip, sits only 25km off the coast of southern Israel — well within range of Hamas’s rockets, although production was restored after a month.
For Rigas, the dangers for natural gas producers off Israel are not new. In July last year Israel shot down three Hizbollah reconnaissance drones that the Lebanese militant group claimed were heading for the Energean Power floating production vessel as it arrived at Karish amid a territorial dispute between the Jewish state and Beirut over control of the gasfield.
Gas production only began at the site in October 2022 after the US brokered a landmark maritime border deal between the two countries, leaving Karish on the Israeli side of the line.
The war with Hamas has reignited fears that Hizbollah could try to target Energean again, leading to a 20 per cent drop in the company’s shares as the conflict started. But having stabilised in recent weeks they are down only 6 per cent from pre-conflict levels, valuing Energean at £1.7bn, helped in part by Rigas and other senior figures stepping in to buy.
Alex Smith, an analyst at Investec, said: “Despite the fact the company has a number of operations across multiple countries, it is largely exposed to the Karish asset and there is arguably single-asset risk.”
“As it ramps up production, it is the key driver to current and future cash flows,” he added.
Rigas said he was confident the vessel is well protected, with the two Israeli warships carrying the maritime version of Israel’s “Iron Dome” anti-rocket shield.
The floating facility had one brief shutdown in October because of a faulty meter reading but has otherwise produced flat-out throughout the war. A skeleton crew is keeping production going, while non-essential staff have relocated to Greece and Cyprus. Rigas said crew members were being flown to the vessel from Cyprus.
Another major short-term challenge the chief executive faces is managing a diverse group of staff at a time when tensions are running high in the region. Energean has offices in Egypt where it is drilling for gas with Italy’s Eni as part of its Eastern Mediterranean-focused strategy.
“We have people in the Israeli office that have their children at war, who have to go to bomb shelters multiple times a day, who are living with the horror of October 7,” Rigas said. “But their view is they have a job to do, and they get the job done.”
“But we also have the Muslim people who feel very strongly about the situation in Gaza,” he added. “Working in this region you have to be able to manage these tensions.”
Rigas, a petroleum engineer and former energy banker, founded Energean in 2007. Having started off with a small oilfield in his homeland of Greece, the company acquired the Karish field in 2016 as Israel looked to diversify the groups operating in the country.
Israel historically relied on imports of fossil fuels to meet its energy needs. But after major gasfield discoveries since 2009 and the start of production from Tamar and the larger Leviathan field, the country has been able to become a natural gas exporter.
Rigas contrasts the speed at which Israel has developed its gas discoveries with other countries such as Cyprus, where development of similar finds has barely begun. He also criticises the failure of many smaller oil and gas operators that have overpromised to investors.
“We have shown you can actually build a substantial oil and gas business and return money to shareholders because our sector has been horrible at delivering results,” Rigas said.
He argued that Energean’s focus on the Eastern Mediterranean had paid off as he “knows the rocks and we know the above-surface issues too”.
“So we understand how to produce gas, which has been proven from our operational success,” he said. “And we understand how to deal with geopolitics as we’re proving today.”
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