Houston-based engineer Wood Group Mustang has started detailed planning to build Israel’s huge Leviathan offshore gas field, announcing that Kiewit Offshore Services will construct its platform at an estimated cost of $500 to $700 million.

Kiewit also built the platform for the adjacent Tamar field, currently the country’s sole supplier of gas.

The Leviathan partners—US-based Noble Energy Inc., and Israel’s Delek Group and Ratio Oil Exploration—have set a fourth quarter 2019 target for the beginning of production at the field located 100 kilometers west of Haifa, along Israel’s northern Mediterranean coast.

The final go ahead on the project's $3.75-billion first stage followed last month’s final investment decision to develop Israel’s largest offshore gas field with estimated reserves of between 500 to 621 billion cu meters of gas. This coincided with completion of financing agreements with major international banks to cover the cost of development.

“The slowdown in the global oil industry has led to a substantial reduction in the cost of developing Leviathan,” said Chen Herzog, energy expert and chief economist at BDO Consulting in Tel Aviv. He estimated the savings at 30% over the cost of the Tamar field, which was developed during a peak in oil and gas prices as well as drilling activity. The cost of the Tamar platform was $1 billion.

The 30,000-ton fixed platform for the Leviathan field is initially being designed to process 12 bcm/year and expandable to 21 bcm/year. The platform will be installed at a water depth of 86 meters. The platform itself will be located 10 kilometers from the shore inside Israeli territorial waters. Four production wells are to be linked to the offshore production and treatment platform and from there by undersea pipeline to two entry points on Israel’s Mediterranean coast.

Israel’s Energy and Water Ministry announced earlier this month that the government would finance a second pipeline at a cost of $100 million that would be earmarked for use by the developers of future offshore gas fields. First-stage production will serve the domestic market as well as Jordan and Egyptian customers, through the existing Pan-Arab pipeline.

The Leviathan partners are in discussions for larger export deals that would involve multi-billion dollar investments in marine pipelines to Turkey, Egypt and to Greece and Italy via Cyprus in order to justify investing in a second stage.

Israeli and Turkish officials have held several rounds of talks on a pipeline from the Leviathan field to southern Turkey. Israeli energy sources said talks are continuing with Egypt on plans to ship gas via a pipeline to two largely idle LNG plants owned by Shell and Spain’s Union Fenosa at Ikdu and Damietta, and from there to Europe.

The most ambitious pipeline project is a proposed undersea line from Leviathan to Italy via Cyprus and Greece for the European market. A feasibility study conducted by IGI-Poseidon for the European Commission estimated its cost at $5.7 billion.