Woodside Still Interested in Leviathan
Woodside’s CEO Peter Coleman confirmed over the weekend that the company still wishes to invest in the Leviathan field offshore Israel. Coleman said it was a “once-in-a-decade opportunity” and that the Leviathan was ideally located to reach domestic and Asian markets. Delays in the formulation of a clear export policy had raised speculations that the Australian giant no longer wishes to be involved in the Eastern Mediterranean country’s gas industry. Last December, Woodside signed a memorandum of understanding with Noble Energy Inc., Delek Group Ltd and Ratio Oil Exploration to acquire 30% of the rights to the Leviathan for $1.25 billion. The deal has been pending a final decision on Israel’s export policy.
More uncertainty over the closing of the deal and the LNG project as a whole has risen when Noble Energy CEO Charles Davidson recently announced that the Leviathan will be a combination of domestic sales and LNG exports. The Leviathan is the largest discovery made by Noble offshore Israel. The estimated recoverable gross mean resources of the field is 18 tcf. Noble Energy operates the Leviathan with a 39.66% working interest.
Other discoveries offshore Israel ensure the country has enough gas to satisfy its domestic needs for decades. Internal debates have been however splitting the country over the past few months. While keeping investors interested and monetizing the country’s riches made sense to some, others expressed their disagreement arguing that the gas should be kept at home for Israel never to be energy dependent again.
The cabinet listened to both concerns and decided to reduce the export quota from a 50% originally recommended by the Tzemach committee to a more sensible 40%. The decision did not reach final stages yet as a petition was filed against the government by members of the Knesset. Implementation of the government’s decision is now pending the ruling of the High Court of Justice.
Israel has recently made another discovery: the Karish field, located northwest of Haifa, is the fifth field to contain over 1 tcf of gas in the Israeli waters. Israel’s LNG plans might remain delayed at this stage, the country has however shared its plan to export its natural gas to immediate neighbours such as Jordan. Currently undergoing a severe energy crisis, the Hashemite kingdom has recently upped electricity prices again and could use a new supply of natural gas until its indigenous energy plans come to fruition - a decision that has not reach domestic consensus due to political reasons.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean.
Follow Karen on Twitter: @karenayat