Last-minute Tax Dispute Delays Woodside’s Leviathan Deal

Australian company demands that profits earned against its $2.7 billion investment count effectively tax-free.

Avi Bar-Eli
Avi Bar-Eli
Send in e-mailSend in e-mail
A drilling rig in the Leviathan gas field in the Mediterranean.
A drilling rig in the Leviathan gas field in the Mediterranean. Credit: Albatross
Avi Bar-Eli
Avi Bar-Eli

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.

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.

Click the alert icon to follow topics:

Comments

SUBSCRIBERS JOIN THE CONVERSATION FASTER

Automatic approval of subscriber comments.

Subscribe today and save 40%

Already signed up? LOG IN

ICYMI

בן גוריון

'Strangers in My House': Letters Expelled Palestinian Sent Ben-Gurion in 1948, Revealed

The Orion nebula, photographed in 2009 by the Spitzer Telescope.

What if the Big Bang Never Actually Happened?

AIPAC

AIPAC vs. American Jews: The Toxic Victories of the 'pro-Israel' Lobby

Bosnian Foreign Minister Bisera Turkovic speaks during a press conference in Sarajevo, Bosnia in May.

‘This Is Crazy’: Israeli Embassy Memo Stirs Political Storm in the Balkans

Hamas militants take part in a military parade in Gaza.

Israel Rewards Hamas for Its Restraint During Gaza Op

Palestinians search through the rubble of a building in which Khaled Mansour, a top Islamic Jihad militant was killed following an Israeli airstrike in Rafah, southern Gaza strip, on Sunday.

Gazans Are Tired of Pointless Wars and Destruction, and Hamas Listens to Them