Woodside retreats from Leviathan

Wednesday, May 21, 2014

Woodside Energy has axed its plans to purchase a sizeable stake in Israel’s Leviathan gas project, terminating its February memorandum of understanding (MOU) with the joint venture participants, the Australian company announced 20 May.

This decision concludes a prolonged and complicated negotiation period, beginning in December 2012, when Woodside purchase 30% of Leviathan, the world’s largest natural gas discovery in the past decade.

Asutralia’s biggest producer said that negotiations “failed to reach a commercially acceptable outcome,” with Chief Executive Officer Peter Coleman saying that it was “a difficult decision and one that was not taken lightly.”

In February 2014, Woodside decreased its planned interest by 5% to 25%. The non-binding MOU would have positioned Israel as a natural gas supplier in the Middle East. Under its terms, Noble would have remained the upstream operator, but Woodside would have been the operator of any potential LNG developments on the field.

“While we have not been able to reach a mutually acceptable agreement with Woodside, we continue to move forward with our partners and the Israel government with plans to develop this world-class asset for the benefit of all stakeholders,” Charles D. Davidson, Noble Energy's chairman and CEO, said.

Map of Noble Energy's activity in the Eastern Mediterranean from Noble Energy

The consortium missed a target deadline to close the full agreement on 27 March,  although Woodside announced at the time that “[discussions] continue with the parties and the Israeli Government with a view to resolving the remaining issues and executing definitive agreements.”

The 25% stake in each of Leviathan’s 349/Rachel and 350/Amit petroleum licenses was reportedly worth US$2.7 billion. Operator Noble estimates the field to have nearly19Tcf of natural gas and 34.1MMbbl of condensate.

Noble, as Operator, retains its 39.66% working interest (WI) in Leviathan. Its partners are Avner Oil and Gas (22.67%), Delek Drilling (22.67%), and Ratio Oil Exploration (15%). 

Read OEDigital's previous coverage of Leviathan and Israel:

Woodside still working on Leviathan

Noble Energy releases Leviathan

Israel attempts to balance regulations, infrastructure with LNG growth

Categories: Contracts LNG Middle East Natural Gas

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