After protracted negotiations between Leviathan's partners and Woodside Petroleum Ltd. (ASX: WPL, OTC: WOPEY)of more than a year, as Israel's Supreme Court debated whether to allow natural gas exports, Delek Drilling LP and Avner Oil Exploration - LP announced the signing of a non-binding MOU with Woodside to join the Leviathan Project. The Leviathan project is located in the area of licenses Rachel/349 and Amit/350, offshore Israel in 5,550 feet of water.
The Delek Group, Israel's dominant integrated energy company, is the pioneering leader of the natural gas exploration and production activities that are transforming the Eastern Mediterranean's Levant Basin into one of the energy industry's most promising emerging regions. In 2009, Delek and its partners discovered the Tamar and Dalit fields 100 kilometers off Israels northern coast, a major turning point for the company and for Israels energy sector. Tamar was the worlds largest natural gas discovery in 2009. Tamars and Dalits reserves are estimated today to contain over 9 trillion cubic feet (TCF) of natural gas, an amount sufficient to meet Israels natural gas needs for over 20 years.
In late 2010, Delek and its partners discovered the Leviathan field, the worlds largest natural gas find in more than a decade, with an estimated resource potential of 19 TCF of natural gas. Leviathan was a game-changing discovery that brought global awareness to the regions exceptional latent potential. The Leviathan field is estimated to have enough gas to supply Europe for over a year.
"Woodside is one of the leading companies in the world in the ... development of LNG facilities. The company brings with it rich experience ... and will be a significant boost for the Leviathan partnership," Delek Drilling and Avner said in a statement.
Woodside and the Leviathan Partners hope to complete the binding agreement for the joining of Woodside to the Leviathan Project by March 27, 2014. In consideration for joining the Leviathan Project, Woodside will pay the Leviathan Partners up to $2.55 billion (net of $160 million royalty payments) and payments for petroleum (if discovered) in several cumulative installments.
If a binding agreement is signed, the working interests of the partners in the Leviathan Project will be: Noble Energy (30.00%), Delek Drilling (16.94%), Avner Oil Exploration (16.94%), Woodside Petroleum (25.00%), and Ratio Oil Exploration (11.12%).
Leviathan will initially be developed as a domestic gas project with gross production of 800 million cubicfeet per day with first gas expected in 2017. The Israeli high court, has however, allowed exports of up to 40 percent of produced natural gas.
The big question is whether gas exports will be by LNG or pipeline. Israel's options include building a pipeline to serve Europe's large gas market or to invest in a more expensive LNG export terminal, which would allow shipments to global markets. A less expensive option of a pipeline to Turkey and the Palestinian Authority has recently gained momentum. Another option for the project would be to build a joint LNG terminal with Cyprus.
Want to enjoy 'Zen' reading - with no ads and just the article? Subscribe todaySubscribe now