Energean Oil & Gas has received approval from its board for the final investment decision (FID) to go ahead with the $1.6bn development of Karish and Tanin fields off the coast of Israel.

Recently, Energean raised $460m from an IPO and the company now intends to use $405m from this to fund its 70% share in the development of the fields.

The approval comes after the company secured a $1.275bn senior credit facility with Morgan Stanley, Natixis, Bank Hapoalim and Société Générale to arrange funding to develop the Karish field over the next three years.

A new floating production storage and offloading (FPSO) unit with gas treatment capacity of 800mscf/day and liquids storage capacity of 800,000 barrels will be used to develop the fields.

The FPSO is expected to potentially provide the scope to expand output for future projects.

The company will use a 90km gas pipeline to connect the FPSO to the Israeli coast and necessary onshore facilities in an attempt to gain access to the domestic sales gas grid.

“The Karish & Tanin development will bring competition and security of supply to the Israeli gas market.”

During next year, the company plans to drill three wells into the Karish discovery, using the Stena Forth Drill Ship.

Technip FMC has been awarded an engineering, procurement, construction, installation and commissioning (EPCIC) contract to help with the development of the project infrastructure.

Energean Oil & Gas CEO Mathios Rigas said: “Today, we commence the development of the project having, in a very short period of time, secured the necessary gas contracts, a turn-key EPCIC contract with Technip FMC, a drilling contract with Stena and project finance backed by four international banks.

“The Karish & Tanin development will bring competition and security of supply to the Israeli gas market, and will support Energean’s strategy to become a major player in the gas developments of the East Mediterranean.”

The company also reached gas sale agreements with private power producers and industrial companies in Israel, totalling 61 billion cubic metres of gas over a term of 16 years.