/By Ilan Shavit/
Woodside Petroleum’s big-ticket entry into Europe through a farm-in into the Leviathan gas field has come down to haggling over the trigger for $US550 million ($570 million) of LNG milestone payments, says The West Australian.
Woodside CEO Peter Coleman, set June 30th as deadline to secure a 30 per cent stake in Leviathan, off Israel, said he remained confident of securing the deal.
Peter Coleman told “The West Australian” that talks with Delek and Noble Energy were stuck over the triggers for gas exports.
There “is nothing we can see that would stop us moving forward . . . it’s just time, ” Woodside Petroleum Ltd. (ASX: WPL) CEO Peter Coleman told “The West Australian”. “We had some assumption in the offer that we made with respect to what the (export) trigger would be and (the Leviathan partners) are watching what the Israeli government does with respect to exports, ” Coleman said. “They are concerned it will never be triggered and they won’t get the payment, (and) we are concerned it will be triggered without being justified.”
Coleman said that the negotiations with Leviathan partners Noble Energy Inc. (NYSE: NBL) and Delek Group Ltd. (TASE: DLEKG) were stuck on the farm-in’s final conditions, which related to the triggers under which the gas export, or liquefied natural gas (LNG), payments would fall.
“The West Australian” says, “Latest reports out of Israel are that the government wants to cut from 50% to 40% the amount of Leviathan gas available for export. It remains unclear whether the proposed cut would deter Woodside given Leviathan’s resource has increased from 17-trillion cubic feet since the farm-in was announced.” The paper adds, “When Woodside announced the farm-in in December, it said it would pay Leviathan’s partners $696 million upfront, $200 million once Israel passed laws permitting LNG exports, and a further $350 million once the Leviathan consortium approved an LNG operation.
The initial development of Leviathan, which contains 19 trillion cubic feet of gas, is for an Israeli domestic operation. A second-phase LNG development – which is the core of Woodside’s ambition – remains subject to Israeli government export approval.”