Woodside's Leviathan deal on verge of collapse
The Australian media reports that Leviathan's partners are planning a pipeline to Turkey rather than an LNG plant.
28 July 13 18:46, Amiram Barkat
The huge deal in which Australia's Woodside Petroleum Ltd. (ASX: WPL) is due to acquire 30% of the rights to the Leviathan gas reservoir for $1.25 billion is close to collapse. Woodside, Australia's largest gas exploration company, signed a memorandum of understanding with Noble Energy Inc.(NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) in December 2012. Under the memorandum, Woodside would make a $696 million down payment at the signing of the deal, which was scheduled for February, but has been frozen until the Israeli government decides on its gas export policy.
Implementation of the government decision on gas exports has been delayed until the High Court of Justice rules on a petition filed against the government by MKs, headed by Labor Party chairwoman MK Shelly Yachimovich and MKs Reuven Rivlin (Likud). Now another factor has emerged which might torpedo a deal: the Australian media reports that Leviathan's partners have changed their export plans for Leviathan from building a liquefied natural gas (LNG) plant to building a pipeline to neighboring countries, apparently Turkey.
Woodside's motive for the Leviathan deal was to build an LNG plant at a cost of $10 billion or more, and to market the product to its customers in China and other Far Eastern countries. But Noble Energy CEO Charles Davidson told analysts on Friday that the company had changed its priorities and "our thinking right now is the Leviathan is going to be a combination of an LNG export as well as domestic sales and we are continuing to move those plans forward."
Noble Energy is considered Woodside's main partner in the Leviathan deal, and Delek has not concealed its disappointment over the terms agreed with Woodside.
Published by Globes [online], Israel business news - www.globes-online.com - on July 28, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
Link to article: http://www.globes.co.il/serveen/globes/docview.asp?did=1000866170&fid=1725
