Energean Secures New $2 Billion Gas Supply Contract
Why we think this is very good
The signing of a new long-term gas supply contract worth over $2 billion is a significant positive development for Energean. The contract provides the company with stable, predictable revenue streams for the next 17 years, which should help strengthen its financial position and support future growth. The favorable pricing terms and lack of major execution risks further enhance the attractiveness of this deal.
Key Points
- Energean signs new $2 billion GSPA contract with Kesem Energy Ltd
- Contract for gas supply to Kesem's new power plant, starting mid-2030s
- Contracted supply of ~1 bcm/yr over ~17 year period
- Favorable pricing terms with floor pricing, take or pay and price indexation
Summary
Energean PLC has announced the signing of a new Gas Sale and Purchase Agreement (GSPA) with Kesem Energy Ltd. The contract is for the supply of gas to Kesem's new power plant, with contracted supply of ~1 bcm/yr from around the middle of the 2030s until the end of the contract period. The contract represents over $2 billion in revenues and ~12.5 bcm in contracted supply over the ~17 year period. The contract contains provisions regarding floor pricing, take or pay and price indexation, which should help maintain healthy margins.