Last-minute Tax Dispute Delays Woodside’s Leviathan Deal

A ceremony to mark the entrance of Woodside Petroleum as a partner in the Leviathan offshore natural gas field was delayed late Thursday after the Australian energy company protested the Israeli government’s planned tax policy toward the project.

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• Business in Brief

Woodside has agreed to invest $2.7 billion in the giant gas field, in exchange for a 25% stake. But the company has been at odds with the Israel Tax Authority over how to treat profits earned against the company’s investment in the field.

Woodside is demanding that they be treated as shareholders’ loans, which would make the profits covering the company’s outlay tax-free, while Israeli officials insist on treating it as a capital investment subject to tax.

Woodside is also demanding accelerated depreciation rights, even though it did not invest in Leviathan’s exploration or initial development.

Earlier Thursday, the government published the final elements of the regulatory framework needed to develop Leviathan, which was a condition for Woodside signing on the partnership agreement.

In addition, the state granted the partnership a 30-year production license to develop the field.