Despite Israel's Evolving Gas Export Policy

Woodside Says It Still Wants Stake in Leviathan Field

Calling investment a 'once-in-a-decade opportunity,' Australia’s Woodside Petroleum looking to export gas to Europe and Asia.

Australia’s Woodside Petroleum remains keen to invest in the giant Leviathan natural gas field offshore Israel, The Australian daily reported over the weekend, citing remarks by CEO Peter Coleman.

Although the agreement in principal inked last December has yet to be completed, it represents a "once-in-a-decade opportunity," Coleman told a conference in Melbourne.

"It is one of the largest recent gas discoveries worldwide, ideally located to produce gas for Israel's domestic market and exports to Asia, Europe and neighboring pipeline customers," the newspaper quoted him as saying.

The news should come as some assurance to Leviathan's partners, including U.S.-based Noble Energy and the Delek Groups. Shares of Delek Drilling closed up 0.2% at NIS 15.69, Avner Exploration, up 0.4% at NIS 2.71 and Delek Group ahead 0.6% at NIS 1,206.

Since Woodside signed the agreement last December, saying it would take a 30% share in Leviathan for at least $1.25 billion, the cabinet has lowered its export ceiling to 40% of total estimated reserves. But even that issue hasn't been fully resolved, with a group of lawmakers and parliamentarians asking the High Court to rule on whether the Knesset must approve the plan.

At the same time, the existing Leviathan partners have indicated they are interested in selling more of the gas to regional markets rather than selling it as liquefied natural gas, Woodside's specialty, to more distant customers in East Asia.

But Coleman told the conference that the way Israel's gas export policy was structured, Leviathan itself would be able to export half of it reserves.

In related news, Delek and Noble reported Sunday that their Tanin field contains an estimated 1.6 million barrels of condensate, which can be used to produce oil. The figures represent proven reserves, but the actual quantity could reach as high as 2.5 million barrels, they said.

The value of the condensate, which can be used to make Brent petroleum, is at least $100 million and could reach as high as $160 million, based on current prices.

The discovery follows similar ones at the Leviathan and Karish fields, which lie on adjacent sides of Tanin. Tanin is part of the Alon licensee, which lies about 120 kilometers northwest of Haifa. It is 47%-owned by Noble, and another 26.6% each by Delek Drilling and Avner, both units of Delek Group.

Two weeks ago, the partners reported some 13 million barrels of condensate at Karish. The Tamar field also has about 13 million barrels of condensate while Leviathan may have 34 million barrels.

The estimates, prepared by Netherland Sewell & Associates, put Tanin's gas reserves at 1.1 trillion cubic feet, which makes it relatively small by recent standards. The Tamar field, which is now serving as Israel's main source of gas, has about nine trillion cubic feet. 

Offshore Leviathan natural gas drilling site.
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