Published On: Wed, May 21st, 2014

Woodside pulls out of Leviathan gas deal off Israel’s coast


The Australian company had sought to buy 25% of the Israeli gas field for $2.71 billion.

Tamar,    The Natural Gas Production Platform Off The Israeli Coast,    Is To Begin It's Natural Gas Production

 

Today the energy company Woodside has officially withdrawn from its long-expected confirmation of membership in the Joint Venture developing the enormous Leviathan natural gas project off the coast of Israel.

The Australian based company specialises in liquefied natural gas (LNG ) production and transportation, and participates in major energy projects around the world.

Woodside had previously signed on to a memorandum of understanding concerning the project, in February 2014, with a consortium led by US based Noble Energy, the drilling and operating partner, and three passive Israeli investment limited partnerships. The Israeli members of the Leviathan Joint Venture are Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration.
Woodside had been negotiating a 25% participating interest in the project with the consortium, in both the 349/Rachel and 350/Amit petroleum licences where enormous quantities of natural gas have already been found.
Commenting on the announcement Woodside’s CEO Peter Coleman said that this was a difficult decision and one that was not taken lightly. “All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal, ” Mr Coleman said.

He then added, “While Woodside’s commitment to growth is strong, even stronger is our commitment to making disciplined investment decisions.”  Finally he, rather graciously, thanked his interlocuteurs over the last several months,  “I would like to acknowledge and thank the Leviathan Joint Venture participants and the Israeli
Government for working with us.”

Hitherto there seem to have already been a number of sticking points, at different times, in the development of Israel’s relationship with Woodside, and its potential  participation in this project. In particular, there have been several shifts in Israeli government policies in this period, e.g. over the availability of sufficient quantities of gas for export to markets outside of Israel, over where to place the LNG facilities themselves, whether onshore or offshore and, as well, concerning such fundamental issues as the levels of resource taxation once the fields are finally brought on-stream.
Throughout Woodside has behaved impeccably as a corporate citizen and with great patience. Whilst on the outside we do not know the precise reasoning that has led to this latest breach, therefore, which indeed seems pretty final, one might hope that it is not quite yet the last word.

 

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