11 Nov 2013
Representatives of Australia’s Woodside Petroleum will be in Israel shortly to move forward on buying 30% of the Leviathan field.
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Representatives of Australia’s Woodside Petroleum Ltd. (ASX: WPL) will soon arrive in Israel to move forward on the acquisition of 30% of the Leviathan field for $1.25 billion. The representatives may arrive this week. “Globes” recently reported that the negotiations on the deal would be reopened, after the High Court of Justice approved the government decision to export 40% of Israeli natural gas. This means that gas from Leviathan will be exported.
Energy market sources believe that Leviathan’s Israeli partners - Delek Group Ltd. (TASE: DLEKG) and Ratio Oil Exploration (1992) LP (TASE:RATI.L) – will demand a much higher price from Woodside’s original offer for the rights to the gas field, otherwise the deal might fall apart. The main arguments behind the demand are the increase in Leviathan’s potential reserves from 16 trillion cubic feet (TCF) to at least 19 TCF, the much higher chances of finding large quantities of oil, and rising competition from Turkish companies interested in buying the gas.
Noble Energy Inc. (NYSE: NBL) owns 39.66% of Leviathan, Delek Group units Avner Oil and Gas LP (TASE: AVNR.L) and DD) each own 22.67% and Ratio owns 15%.
In a separate development, Turkish conglomerate Zorlu is in talks to buy natural gas from Leviathan.Zorlu Energy CEO Ibrahim Sinan Ak, said for the first time on Friday, that the company was interested in buying 3 billion cubic meters of natural gas a year from the Israeli gas field under a 15-year contract.
Media reports say that the gas purchases would be part of a project to lay a pipeline from the Leviathan field to Turkey, at a cost of $2.5 billion. JPMorgan says that a pipeline from Leviathan to Turkey would have a higher return on equity than construction of a liquefied natural gas (LNG) plant, and that the payback period would be less than four years.
The choice of projects could have a major effect on the future of the pending deal between Leviathan’s partners and Woodside Petroleum Ltd. (ASX: WPL). The Australian company, which has offered $1.25 billion for 30% of the rights to Leviathan, specializes in building LNG plants, and its customers are in East Asia. For Woodside, there is no special added value in a pipeline to Turkey.
Ak spoke at the European Energy Summit in Istanbul. Delek Drilling LP (TASE:DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L) chairman Gideon Tadmor, who also attended, said that there was no reason that Israeli gas should not begin flowing to Turkey by 2017. “For this to happen, we must speed up the negotiations on the development plans and obtain support from both governments,” he said.
There have been reports that Zorlu is a partner in several of the consortia which have expressed an interest in laying a pipeline from the Leviathan gas field to the company’s customers in Turkey.
Zorlu, one of Turkey’s largest companies, owns 25% of Dorad Energy Ltd., which will become Israel’s largest independent power station, as well as stakes in two smaller power stations under construction adjacent to Makhteshim Agan Industries’ plants at Ramat Hovav and in Ashdod.
Published by www.globes-online.com
