Australian energy giant Woodside Petroleum's entry as a partner in Israel's natural gas field Leviathan seems a more distant prospect following the publication of a prospectus by two current partners in the field on Tuesday night.
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- Delek Drilling and Avner Shine as Tamar Natural Gas Production Goes Online
- Woodside Likely to Sign Pact With Israel's Leviathan This Week
- Noble Energy Sees Egypt, Jordan as Israeli Gas Field’s Main Clients
- Is the Leviathan Gas Field a Sure Thing or a Whale of a Problem?
Woodside, which specializes in projects requiring shipping liquid natural gas over long distances, was supposed to purchase a 30% stake in Leviathan for $1.25 billion. The Australian company intended to build a liquefied natural gas plant to transport gas from the field to customers in East Asia.
However, the prospectus published by Avner Oil & Gas Exploration and Delek Drilling from the Delek Group did not discuss the East Asia option. Rather, it stated that talks were being conducted about exporting gas through a sea-based pipeline to Turkey, considered the principal destination, to Greece and Cyprus, and to the Israeli coast as well as to Jordan and the Palestinian Authority by a land-based pipeline.
Another possibility, mentioned for the first time, was pumping natural gas through a sea-based pipeline to a liquefaction facility in Egypt.
The Leviathan gas field is a deepwater field located in the Mediterranean Sea off the coast of Hadera.
It is considered the largest natural gas discovery in the world in the past decade, with an estimated 18 trillion cubic feet in natural gas reserves.
There is also a significant likelihood that oil will be discovered deeper under the seabed in the field, with oil explorer Noble Energy expected to drill a test well 6.5 kilometers below sea level by year’s end.
Leviathan's owners Delek Group, Nobel Energy and Ratio Oil Exploration signed an initial agreement with Woodside in December 2012 to give the latter a stake in a deal that valued the field at $5 billion.
Based on natural gas futures prices the value of the field is now closer to $8.3 billion.
A final agreement has yet to be signed by the parties, while they wait for the government to reach a final decision regarding the permissible level of natural gas exports.
The prospectus added weight to a report by TheMarker last week that the Woodside deal was likely to be altered or canceled because the field partners were would request a higher price than the one set in the initial agreement.
This higher price reflects an increased value of Leviathan due to the possibility of exporting the natural gas through a sea pipeline to Turkey, which opened up only after the initial deal with Woodside.
The prospectus stated that exporting natural gas to Greece and Turkey would allow it to be transported to the rest of Europe, but an initial study showed that laying a pipeline to Europe would be "a complex engineering project with geopolitical complexity."
The possibility of merging Avner Oil & Gas Exploration and Delek Drilling was also mentioned.
Delek Group stated that it had already contacted tax authorities regarding the possible merger.