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Chevron's (CVX) Pipeline Venture to Ship Israel's Gas to Egypt

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With its aim to develop Israel’s natural gas fields, Chevron Corporation (CVX - Free Report) together with other energy companies is planning to make an investment of approximately $235 million in pipelines to export the Israeli fuel to Egypt.

The Leviathan and Tamar fields located in the Mediterranean Sea off the coast of Israel are jointly owned by Chevron and Delek Drilling LP with Chevron being the operator in both fields. Per Delek Drilling LP, an agreement is signed by the partners per which Israel Natural Gas Lines Ltd. (INGL) will build a new subsea pipeline and expand some of its prevailing pipelines.

The new pipeline will be laid between the Israeli coastal cities of Ashdod and Ashkelon, near the boundary of the Gaza Strip and will cost 738 million shekels. Meanwhile, other pipeline expansion will cost around 27 million shekels. Further, INGL will allow the partners to transmit 7 billion cubic meters of gas per annum to Egypt. The gas companies will finance 56% of the new pipeline apart from giving guarantees on INGL’s portion of the funding to cover the remaining 44%.

Chevron became the first energy major to enter the Israeli market with the completion of its acquisition of Texas-based Noble Energy last October, which has stakes in Israeli offshore gas fields.

The takeover, which is one of the largest energy deals since the beginning of the coronavirus pandemic, gave Chevron the vital access to Noble Energy’s low-cost, proven reserves along with its cash-generating offshore assets in Israel, especially the flagship Leviathan natural gas project. This, in turn, boosted the company’s base in the Mediterranean.

Company Profile

Chevron is one of the largest publicly traded oil and gas companies in the world with operations spread to almost every corner of the globe. This San Ramon, CA-based company is fully integrated, which is indicative of its participation in every energy-related aspect, right from oil production to refining and marketing.

Zacks Rank & Key Picks

Chevron currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are DCP Midstream Partners, LP , Plains Group Holdings, L.P. (PAGP - Free Report) and Altus Midstream Company (ALTM - Free Report) , each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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