Chevron (CVX) & Partners Add Third Pipeline to Leviathan Project
Chevron Corporation CVX and its Israeli partners in the Leviathan project announced their plans to construct a third pipeline in order to increase production from the gas field. With an investment of approximately $568 million, this strategic move highlights CVX’s commitment to meeting growing energy demands. The addition of the pipeline is expected to significantly boost Leviathan's production capacity and pave the way for future growth.
This blog delves into the details of the partnership and the potential implications of this venture for regional energy markets.
The Leviathan Project and Its Significance
The Leviathan project is a collaborative effort between Chevron, NewMed Energy, Ratio Energies and other stakeholders. Located off the coast of Israel, the Leviathan gas field is a substantial source of natural gas reserves. It plays a crucial role in meeting the energy demands of Israel, Jordan, Egypt, and potential customers in Europe and Asia.
The project's success has positioned Israel as an emerging player in the global energy market.
Benefits of the Third Pipeline
Increased Production Capacity
The additional infrastructure will help in the extraction and transportation of a higher volume of natural gas. This, in turn, is projected to raise production from the current 12 billion cubic meters per year (m3/yr) to nearly 14 billion m3/yr. The production is anticipated to reach 21 billion m3/yr in the long run.
Enhanced Energy Supply
The third pipeline will not only benefit the partners involved but also reinforce the energy supply to various regions. The Leviathan project currently caters to the Israeli gas market, as well as neighboring countries such as Jordan and Egypt.
The expansion of the project signifies the partners' commitment to meet the growing energy demands of these nations. Furthermore, the initiative to serve customers in Europe and Asia showcases the potential of the Leviathan gas field to become a global energy supplier. Chevron took hold of the Leviathan project through its acquisition of Noble Energy.
Potential Economic Growth
The project expansion is expected to generate employment opportunities, foster technological advancements and contribute to the overall development of the local economy. The enhanced production capacity and expanded customer base will have a positive effect on various sectors, stimulating economic growth and promoting stability.
Further Plans
In order to further capitalize on the potential of the Leviathan field, the consortium is planning the construction of a floating liquefied natural gas (LNG) terminal.
This terminal, located off the coast of Israel, will have an LNG capacity of approximately 6.5 billion m3/yr. It will also hold opportunities for exporting LNG to international markets, enabling the partners to diversify their customer base and leverage global demand for natural gas.
Conclusion
The addition of a third pipeline, along with plans for a floating LNG terminal, positions the Leviathan gas field as a major player in the global energy landscape. These projects also showcase the potential of further collaboration and innovation in the energy sector.
Zacks Rank and Key Picks
Currently, CVX carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Evolution Petroleum EPM and Global Partners GLP, both sporting a Zacks Rank #1 (Strong Buy), and NGL Energy Partners NGL, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum is worth approximately $268.48 million. EPM currently pays dividends of 48 cents per share, or 5.95% on an annual basis.
The company currently has a forward P/E ratio of 7.30. In comparison, its industry has an average forward P/E of 10.40, which means EPM is trading at a discount to the group.
Global Partners is valued at around $1.04 billion. In the past year, its units have risen 44.8%.
The partnership currently has a forward P/E ratio of 9.01. In comparison, its industry has an average forward P/E of 14.10, which means GLP is trading at a discount to the group.
NGL Energy Partners is valued at around $526.39 million. In the past year, its units have risen 180.9%.
The partnership currently has a forward P/E ratio of 4.59. In comparison, its industry has an average forward P/E of 14.10, which means NGL is trading at a discount to the group.
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