As reported in the Australian: Woodside upbeat on Israeli gas deal despite hurdles.
WOODSIDE Petroleum chief executive Peter Coleman has left no doubts over his desire to move into Israel’s giant offshore Leviathan gas field, but remains silent on the extent of hurdles the group is facing in its non-binding $US1.3 billion-plus buy-in deal.
Speaking to a closed conference in Melbourne yesterday, Mr Coleman said Woodside was pursuing the deal despite it not being finalised eight months after its December announcement.
“The opportunity to buy in to a resource like Leviathan is a once-in-a-decade opportunity,” Mr Coleman said.
“It is one of the largest recent gas discoveries worldwide, ideally located to produce gas for Israel’s domestic market and export to Asia, Europe and neighbouring pipeline customers.”
Doubts about the deal have risen in the past week after Leviathan operator Noble Energy said the project might direct more gas to regional customers at the expense of the LNG plant Woodside would operate under its buy-in deal.
Subsequent unsourced Israeli press report said pipeline exports to Turkey were becoming a more appealing option for the partners and that because of this, Woodside might need to pay more to enter the joint venture.
Delek Group, Leviathan’s Israeli shareholder, is also reportedly unhappy with the terms Woodside had signed up on.
Noble also revealed there had been a high court challenge over whether Israel’s gas export policy needed to be approved by parliament, rather than just cabinet.
“With the Israeli High Court to rule as early as today (Thursday) on the government’s process in determining this policy, we look forward to this issue being resolved so we can finalise our agreement with the Leviathan joint venturers,” Mr Coleman said.
He confirmed the Israeli export policy allowed 50 per cent of Leviathan’s reserves to be exported, despite limits of 40 per cent of total Israeli gas reserves. This is in line with Woodside’s understanding when it signed the deal.
When the agreement was signed, Delek said it hoped to have a binding agreement by February.
Under the deal, Woodside was to pay an up-front payment of $US696 million, followed by a $US200m payment when Israel’s gas export laws were passed. Another $US350m payment would be made when a final investment decision on an LNG plant was made.
On top of this, Woodside faced other payments of up to $US1bn if LNG prices rose above unspecified levels.