How Woodside's Leviathan Withdrawal Affects Israeli Export Options | Natural Gas Europe

June 02nd, 2014 12:20am

How Woodside's Leviathan Withdrawal Affects Israeli Export Options

Woodside’s withdrawal from the Leviathan deal leaves the door open to various speculations regarding Israel’s export strategy. The parties were engaged in serious talks that could have led to the Australian giant acquiring 25% of the Leviathan - a 19 Tcf field located 130 kilometers of Haifa, in waters 1,500 meters deep and operated by Noble Energy. The parties had previously signed an MOU on February 7 preparing for the final signing in March 27. The closing of the deal failed to happen as expected in March due to a disagreement between the company and the Israeli Tax Authority. Despite Woodside and the Leviathan’s partners pledge to pursue their pourparlers, they recently declared the end of the negotiations saying they had ‘failed to reach a commercially acceptable outcome’.

Woodside and the Leviathan partners' decision to part ways has numerous ramifications. The Australian company would have brought in its LNG expertise. Without it, it is unlikely that Israel will opt for an onshore LNG terminal to export its natural gas to export markets. If Israel did not prove to be too lenient towards Woodside, it is perhaps because the newly hydrocarbon-rich country has other plans for itself. And it is not to be dismissed that it might be inclined to diversify its export routes to ensure its robustness vis-à-vis adversity. Such a philosophy would not be hazardous; in fact, Israel suffered for a long period of time from its dependence on Egyptian gas supplies. The disruption in the flow of gas from its Egyptian neighbour due to the sabotage of the Arab Gas Pipeline was a wake-up call for Israel to achieve energy independence and strengthen its energy security. When it comes to export routes, and given the complicated geopolitics of the region, a combination of various scenarios is foreseeable.

Jordan too experienced a similar vulnerability towards Egypt, given that the Hashemite Kingdom has been also highly reliant on imports from Egypt to satisfy domestic demand. Jordan suffered from the disruption in the flow of gas in the aftermath of the Arab Spring and is currently undergoing a severe energy crisis due to that. Israel, taking advantage of the momentum, and whilst it studies possible solutions to reach further markets, decided to start by exporting to its immediate neighbours: a Jordan in desperate need of cheap natural gas imports to substitute the Egyptian gas, an Egypt suffering from domestic gas shortages due to export obligations and a growing population, and the Palestinian Authority.

In January 2014, the Leviathan partners entered a USD 1.2 billion deal to sell 4.75 bcm to the Palestine Power Generation Company. In February, the Tamar partners agreed to sell the Jordanian firms Arab Potash and Jordan Bromine 1.8 bcm of natural gas over 15 years for USD 500 million. Furthermore, the partners of the Tamar field signed a letter of intent with Spanish firm Union Fenosa Gas to supply gas to the company’s existing gas liquefaction facilities in Egypt. Israel would not only be selling gas to the Egyptians, but would use their export terminals to reach export markets, such as Europe or Asia where gas prices are higher than the rest of the world.

Whilst exporting to immediate neighbours seems a logic and simple endeavour, Israel is unlikely to limit itself to its environs. How Israel would achieve such reach is still a matter of speculation. Because a deal with Woodside is no longer a possibility, the remaining options would be using Cyprus’ projected LNG terminal in Vassilikos, using an FLNG or exporting gas via an undersea pipeline that would connect the Leviathan field to the Turkish coast.Turkish energy companies Turcas Petrol and Zorlu Holding have recently announced that they are considering building a pipeline which may cost $2-$2.5 billion and could supply 7-10 billion cubic meters of gas annually to Turkey via a 500-kilometer undersea route.

The prerequisite to such a solution remains the same: a solution to the Cyprus conflict given that such a pipeline would have to cross Cyprus’ exclusive economic zone. Joe Biden’s recent visit to the island created new hopes that the talks would this time progress and potentially reach a settlement. The second necessity is the reestablishment of trust between Israel and Turkey: despite Netanyahu’s apology to the Turks in March 2013 over the Mavi Marmara flotilla incident and the restoration of their diplomatic ties, to date, their relationship remains fragile.

Karen Ayat is an analyst focused on energy geopolitics.  Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat

Link to source: http://www.naturalgaseurope.com/woodside-withdrawal-leviathan-deal-israel-export-options?utm_source=Natural+Gas+Europe+Newsletter

Oettinger highlights Greece’s importance for gas market | Interfax

By Annemarie Botzki
Posted 29 May 2014 08:15 GMT

Greek Prime Minister Antonis Samaras met European Commissioner for Energy Günther Oettinger on Wednesday to discuss Greece’s role in European energy security.

The two discussed Greece’s offshore hydrocarbon reserves and its LNG terminal, according to Oettinger, as well as progress in the privatisation of Greece’s gas transmission network operator, DESFA. State Oil Company of Azerbaijan Republic bought a 66% stake in DESFA in 2013.

Oettinger said Greece’s role in the European gas market is of growing importance. “We also discussed a potential pipeline system offshore Greece – linking hydrocarbon reserves to the market,” he added.

An offshore pipeline connecting the Greek and Italian gas transportation systems – the IGI-Poseidon pipeline, led by Italian utility Edison and Greek public gas supply company DEPA – is included on the EU-wide list of Projects of Common Interest.

“Such a pipeline project, as well as an LNG alternative, would make a larger contribution to European energy security, especially if combined with prospective Greek hydrocarbons production,” a study by Greece’s Hellenic Foundation for European and Foreign Policy, titled Greece in Europe’s Southern Gas Corridor Strategy, found.

The European commission is aiming to diversify its supplies in light of the Ukraine crisis and has continually stressed the importance of LNG imports.

“The Greek LNG terminal is of growing importance in this regard,” Oettinger told journalists in Brussels on Wednesday.

The Revithoussa terminal, located west of Athens, is operated by DESFA, which is a subsidiary of DEPA.

Greece receives most of its LNG from Algeria on long-term contracts, with some additional volumes from the spot market, according to International Energy Agency data. Following an expansion of the terminal in 2007, further upgrades to increase gas receiving, storage and send-out capacity are planned.

The project will involve the construction of a third storage tank and will cost up to €166 million ($226 million), according to the European Investment Bank. The bank has proposed to finance €80 million of this.

SOURCE

Αναμένοντας το Saipem 10000 | InBusiness

Αναμένοντας το Saipem 10000

Στο drillship της ΕΝΙ οι ελπίδες για τερματικό εντός χρονοδιαγραμμάτων

  Αντώνης Αντωνίου

• 28 Μαίου 2014
• 05:44 πμ

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Την τελευταία της ευκαιρία για τερματικό LNG εντός των χρονοδιαγραμμάτων που είχε θέσει, εναποθέτει σε μεγάλο βαθμό η κυβέρνηση στο εξειδικευμένο πλοίο που θα χρησιμοποιήσει η ΕΝΙ για έρευνες στο Οικόπεδο 9.
Σε αντίθεση με τις έρευνες που διεξήγαγε η Noble στο Οικόπεδο 12 κατά τις οποίες χρησιμοποίησε πλατφόρμα, η ΕΝΙ εκτός απροόπτου θα χρησιμοποιήσει ειδικό πλοίο που κάνει τη συγκεκριμένη εργασία (drillship). Πρόκειται για το Saipem 10000 το οποίο ανήκει στην Saipem, θυγατρική της ΕΝΙ. Το 228 μέτρων πλοίο βρίσκεται αυτήν την περίοδο στη Μοζαμβίκη και εκτός απροόπτου αναμένεται στην Κύπρο περί τα τέλη Αυγούστου. Το πλοίο που μπορεί να τρυπήσει σε βάθος μέχρι 10.000 πόδια από την επιφάνεια της θάλασσας φτάνοντας μέχρι και 30.000 πόδια στο υπόστρωμα, θα κάνει το πρώτο βήμα για να διαφανεί κατά πόσο υπάρχουν στην κυπριακή ΑΟΖ κι άλλα κοιτάσματα τα οποία μπορούν να τύχουν εκμετάλλευσης σε σύντομο χρονικό διάστημα ώστε η λειτουργία του τερματικού υγροποίησης να είναι βιώσιμη αλλά και επικερδής.

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Απ’ εκεί και πέρα, θα χρειαστεί και σ’ αυτήν την περίπτωση επιβεβαιωτική γεώτρηση ενώ περαιτέρω ελπίδες εναποτίθενται και στις νέες έρευνες που θα πραγματοποιήσει η Noble σε άλλο σημείο του Οικοπέδου 12. Η Noble πάντως, ξεκαθάρισε πως για αρχή προτιμά την εμπορική εκμετάλλευση των κοιτασμάτων ανατολικής Μεσογείου μέσω αγωγών έστω κι αν προηγήθηκε υπογραφή MOU που έδινε προτεραιότητα σε τερματικό στην Κύπρο.
Ο πρώην διευθυντής της υπηρεσίας Ενέργειας του υπουργείου Εμπορίου Σόλωνας Κασίνης σχολίασε στο InBusinessNews πως η δημιουργία τερματικού είναι η μόνη λύση για την Κύπρο και όσο πιο γρήγορα καταλήξει η κυβέρνηση σε τελεσίδικη απόφαση τόσο το καλύτερο. «Υπάρχουν επαρκείς ποσότητες στην κυπριακή ΑΟΖ για να καλύψουν τη λειτουργία του τερματικού», σχολίασε.
Στη ξηρά και συγκεκριμένα στο λιμάνι Λάρνακας, οι υποστηρικτικές διαδικασίες για τις ενέργειες της ΕΝΙ τρέχουν με γοργούς ρυθμούς. Η κοινοπραξία Medserv-Καραμοντάνης ετοιμάζει τις απαραίτητες εγκαταστάσεις. Παράλληλα η εταιρεία Halliburton που θα δημιουργήσει τη λεγόμενη «λάσπη» που θα χρησιμοποιηθεί στη γεώτρηση, έχει υπογράψει συμφωνία με την ΕΝΙ και αναμένεται να στήσει τη μονάδα παραγωγής εντός του χώρου που δόθηκε στη Medserv.

• 28 Μαίου 2014
• 05:44 πμ

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Link to source: http://www.sigmalive.com/inbusiness/news/business/energy/%CE%B1%CE%BD%CE%B1%CE%BC%CE%AD%CE%BD%CE%BF%CE%BD%CF%84%CE%B1%CF%82-%CF%84%CE%BF-saipem-10000

Mediterranean gas not yet the answer for Turkey's ties with Israel, Cyprus | Al Monitor

US Vice President Joe Biden, on his recent visit to Cyprus, showed the importance the White House is placing on finding alternate energy routes into Europe for the newly discovered deposits of hydrocarbon reserves in the Eastern Mediterranean in an attempt to loosen Europe’s dependence on Russia.

Summary Michael Leigh of the German Marshall Fund argues the newly discovered hydrocarbon reserves in the Eastern Mediterranean are not agents of peace, but if a political settlement were achieved, both with Cyprus and Israel, these reserves could reinforce the peace with Turkey.

Author Tulin Daloglu Posted May 28, 2014

Biden’s May 21 arrival on Cyprus marked the most senior US official visit to the island in more than five decades.

Turkish Foreign Minister Ahmet Davutoglu called Biden’s meeting with Turkish Cypriot President Dervis Eroglu a “historic step,” providing ample encouragement for a fair and just settlement of the Cyprus issue. “Biden’s message, which demonstrates an equidistant approach to the parties, is positive, according to us,” Davutoglu said May 23.

To what extent will the discovery of gas in the Eastern Mediterranean play a role in progress on the Cyprus problem, or on efforts toward a Turkish-Israeli reconciliation? After all, Israel’s Leviathan and Tamar offshore natural gas fields are greater in amount and depth than Cyprus’ Aphrodite and Block 12 reserves.

The underlying assumption is twofold: that Turkey will, for the foreseeable future, have a ferocious demand for gas to feed its economy, and that Turkey envisions itself as an energy transit hub between Central Asia, the southern Caucasus and Europe. In this context, the Eastern Mediterranean gas is very attractive to Turkey, regardless of its amount and regardless of whether it could really provide an opportunity to free Turkey from dependence on Russian and Iranian imports.

Michael Leigh, of the German Marshall Fund and a former EU Commission director-general for enlargement, told Al-Monitor, “This assumption can be challenged on economic grounds before you come to any political issues which are at stake.” Leigh wondered whether Turkey would position its policy on these highly political questions regarding the hydrocarbon deposits in Cyprus and Israel.

Leigh began his argument questioning Turkey’s future demand for gas. “This very much depends on the growth rate of the Turkish economy. Certainly, if you project the kind of growth rates that Turkey has enjoyed over the last decade, you might conclude that Turkey needs to add to its energy supply from any sources whatsoever,” he said. “However, growth has now slowed down tremendously in Turkey. It is very hard for us to project forward and to know what that demand will be in the future.”

Turkey has a number of other sources of gas that are far greater in scale than what might ever be available in the Eastern Mediterranean, said Leigh, with Russia at the top of the list. “Of course, Turkey has an interest in the European Union diversifying away from Russia to some degree,” he said. “But there is no way the Eastern Mediterranean (gas) could make a significant dent in the 60% of gas Turkey is currently buying from Russia. Also, Turkey can look to Azerbaijan and to Iran as important sources of gas.”

Leigh also puts a big question mark over the price issue. “It is still too early to say what price either Israel or Cyprus will be ready to sell gas to Turkey. But costs in Eastern Mediterranean are rather high,” he said. “And it is very far from certain that Turkey will be ready to pay the price that the companies in the Eastern Mediterranean would need to get a decent return on their investment. There is all that by way of uncertainty.”

A prominent source in the Turkish Energy Ministry said Turkey is not concerned a bit about any of the above. “There are not enough deposits of hydrocarbons in the Aphrodite gas field or Block 12, but the Greek Cypriots remain hopeful for coming up with new discoveries. Speaking for now, though, it is not feasible for any investor to spend the money on infrastructure to bring the hydrocarbons to the surface,” the official told Al-Monitor.

“To us, it is their problem whether they find additional reserves or whether they want to export these hydrocarbons at any given time. If they do want to export them, however, it is clear that Turkey is the best route and therefore they will realize that it is also in their best interest to find a justly negotiated settlement of the Cyprus issue.” He added, “When their politics come to this realization, we will be happy to sit down and talk about it in detail.”

So far, the scale of discoveries in Cyprus has been considerately below expectations, making an investment for a floating liquefied natural gas (LNG) plant out of question. Leigh said that Noble energy, TOTAL and ENI are drilling to find new gas deposits, and stressed that building floating LNG plants is a costly investment. “For an LNG plant to be commercially viable it needs two trains (liquefaction facilities). … One train LNG plant costs $6 billion. Two trains cost $9 billion and three trains cost $12 billion,” Leigh said. “And to get a good economic return, you really need these two (trains). So, the court is out as to whether Cyprus is going to find sufficient quantities in order for the export options to be viable. The other main idea as to how Cyprus could have enough quantity to justify export infrastructure is by joint monetization with Israel, which has been discussed a great deal. The Cypriots hope very much that the Israelis will agree that the gas from the Leviathan field that should be on stream in 2017 should be sent to Cyprus.

"And if you pull Cypriot and Israeli gas (together), there will then be sufficient quantity that will interest energy investors. Until now, Israelis have shown no interest in this. Their famous report from an intergovernmental committee — now a year and a half ago — strongly advises that Israel should retain the control of its own gas. And maybe much further down the road, people may think about this.”

Leigh was highly doubtful whether Turkey would be moved to take a more forthcoming position on the Cyprus question due to energy issues, especially with Turkey's prospects for other energy imports.

As for Israel, although there is word in the Ankara beltway that Turkey’s Energy Minister Taner Yildiz is courting Davutoglu for a speedy reconciliation with the Jewish state, all bets seem to be going south, making normalization an unrealistic expectation for now. Further signaling that all bets are off, on May 26, an Istanbul court ordered the arrest of four former senior Israeli military officers who the court believes are ​directly responsible for the deaths of 10 Turks who were aboard the Mavi Marmara in May 2010. This political conundrum certainly prevents the energy talks from moving forward between the two countries. Yet, there is no doubt that the pipeline from Israel to Turkey will be much less expensive than a floating LNG plant.

“Because of the hostility of the Turkish government to Israel, Israelis would not want to put all their eggs in the same basket in exporting its gas. What happens if Turkey does what Russia did, like turning off the tap one day?” Leigh said. “Talking to senior officials in Israel, they seem to take the view: If Turkish companies are ready to make the investment, run the risk, they are not going to block it.”

Israel’s immediate priority seems to be exporting to neighboring countries such as Jordan, Palestinian lands and, possibly, Egypt. In other words, the companies concerned are far from decided whether exporting to Turkey is feasible.

Leigh said there are two possible routes for a pipeline from Israel to Turkey. One is from Israel through the Lebanese Exclusive Economic Zone (EEZ) and the Syrian EEZ, and the other is through the Cyprus EEZ. “As far as the law of the sea is concerned, a coastal state does not have the right to veto a pipeline passing through its EEZ, but it has to approve the route that the pipeline takes. So, de facto it provides a veto,” Leigh said.

This means that Lebanon and Syria have de facto veto rights on Israeli gas exports to Turkey. It looks unlikely for now that companies would run the risk of this route, given events in Syria and Lebanon. Therefore, the Cyprus EEZ route would be the only route they would consider, and the Cyprus government would have to approve.

In sum, Leigh does not consider the new hydrocarbon reserves to be an agent of peace-building efforts in the region. “If there is a political breakthrough, either on Cyprus or on Israel, the energy cooperation can reinforce it. … Clearly, the pipelines will create a new common interest, but it is not the motive (to enforce these countries to settle their score and finally make peace). Once they settle their political differences, it will reinforce the peace,” he said.

According to Leigh, the more convincing reason as to why Turkey might be interested normalizing its relations with Israel is the following. “When relations between Israel and Turkey were close, there was a tremendous area of military cooperation. The Israeli air force had used Turkish airspace for its exercises, and they in return provided transfer of military technology,” Leigh said. “Now, Israel has switched its military cooperation to Cyprus and Greece. Turkey and Greece still have their issues, and, obviously, the Cyprus issue is unresolved. This is a much greater national security threat to Turkey than this energy issue.”

Even if this is the case, in the words of an Israeli diplomatic source, “Turkey is quite an unpredictable partner for us under (Prime Minister Recep Tayyip) Erdogan’s leadership, and we have no interest to be part of Turkey’s domestic politics, at least up until the presidential elections in August. We will see what comes after then."

Link to source: http://www.al-monitor.com/pulse/originals/2014/05/eastern-mediterranean-gas-cyprus-greek-cypriots-biden.html

Scotland and Cyprus agree link to study CO2 storage in eastern Med | Click Green

Scotland and Cyprus agree link to study CO2 storage in eastern Med

by ClickGreen staff. Published Wed 21 May 2014 00:01, Last updated: 2014-05-21

University of Nicosia agrees link-up with Scottish CCS industry group

Scientists from Scotland and Cyprus have formed a research partnership to study the viability of the storage of carbon dioxide(CO2) as part of a developing hydrocarbon industry in the eastern Mediterranean.

The agreement between the University of Nicosia’s Centre for Green Development and Energy Policy (CGD) and Scottish Carbon Capture & Storage (SCCS) will now seek funding for researchers from across the European Union to work together to identify likely geological CO2 storage sites beneath the Mediterranean Sea to the south of Cyprus.

Using methodology developed in previous SCCS projects to assess CO2 storage capacity in the North Sea, the scientists will study seismic data and other information to build a picture of storage sites – including depleted oil and gas reservoirs and saline aquifers – which could boost Cyprus’s capacity for tackling carbon emissions.

Carbon capture and storage (CCS) – a chain of technologies that captures and stores CO2 from large point sources – could help countries manage their carbon footprint if used at commercial scale. However, CCS relies on the availability of suitable storage sites.

Professor Stuart Haszedine, a SCCS director, announced the Memorandum of Understanding between SCCS and CGD in a speech today at the All-Energy 2014 conference in Aberdeen.

Prof Haszeldine said: “Our research agreement with the University of Nicosia’s Centre for Green Development is an exciting development for SCCS.

“It brings together expertise from both research groups for the shared goal of opening up new opportunities for CO2 storage, as a fledgling hydrocarbons industry in Cyprus plans its future. It will also provide excellent training opportunities for staff and students.”

Dr Marios Valiantis, director of the Centre for Green Development and Energy Policy at the University of Nicosia said: “Cyprus is getting ready for what we hope will be a big new offshore oil and gas industry.

“The Government has said that it would like to progress plans for CCS too, following the European CCS Directive. This led us to the expertise of SCCS and Professor Haszeldine, and we look forward to working with SCCS to jointly develop some plans to put before the government of Cyprus.

“By developing Carbon Capture and Storage alongside the hydrocarbon industry, we aim to grow our economy without contributing to climate change.”

Link to source: http://www.clickgreen.org.uk/news/international-news/124657-scotland-and-cyprus-agree-link-to-study-co2-storage-in-eastern-mediterranean.html

The Continental Shelf Delimitation Agreement Between Turkey and “TRNC” | EJIL

May 26, 2014, Nikolaos Ioannidis*
Last month, Turkey submitted a note verbale to the Secretary-General of the United Nations setting out the geographical coordinates of its continental shelf in the Eastern Mediterranean, as established by a delimitation agreement with the “Turkish Republic of Northern Cyprus” (“TRNC”). The agreement was signed on 21 September 2011 and ratified by the Turkish government on 29 June 2012. A map published by the Turkish Ministry of Foreign Affairs depicting the agreement is pictured below. (The reasons why the “TRNC” is in quotation marks will be elaborated below.) By transmitting this document to the UN Secretary-General, Turkey sought to achieve the publication of the agreed coordinates in the Law of the Sea Bulletin (LSB), where official submissions by states regarding the law of the sea are published. Although Turkey has not acceded the UN Law of the Sea Convention (‘LOSC’), it acted in accordance with article 84(2) LOSC (due publicity of charts or lists of geographical coordinates regarding continental shelf delimitation). Nonetheless, the submission of Turkey was not listed as an official deposit on the website of the Department of Oceans and the Law of the Sea (DOALOS).

The Turkish approach on the regime of islands
The delimitation agreement outlines some of Turkey’s longstanding positions on the law of the sea. It deals only with the continental shelf and does not provide for the delineation of an exclusive economic zone (EEZ). While there is nothing precluding coastal states from choosing which maritime zones to claim and/or to delimitate, Turkey’s choice not to delimit an EEZ with the “TRNC” alludes to the Turkish position that islands in certain regions (implying the Aegean Sea) should not be entitled to claim maritime zones of their own other than territorial sea or should have reduced capacity to generate such zones. This stance was formulated in the context of the dispute between Turkey and Greece concerning sovereignty over the maritime space of the Aegean Sea;  since the 1970s, Turkey has sustained that the Aegean islands are situated on the continental shelf of Anatolia (Turkey) and, consequently, do not have a continental shelf of their own. This matter was an apple of discord between the Turkish and the Greek delegations over the course of the Third United Nations Conference on the Law of the Sea (‘UNCLOS III’). In the end, by virtue of article 121(2) LOSC, the Conference recognised the rights of islands to generate maritime zones. Article 121 LOSC reflects customary law (ICJ, Nicaragua v Colombia (2012), para 139) and, accordingly, applies to non-states parties as well.

Turkey’s resentment at the provisions on the regime of islands was one of the reasons it voted against and has not yet acceded to the LOSC (see Plenary Meetings 160 and 189). For the sake of clarity, it should be pointed out that when it comes to maritime delimitation, the maritime space an island can claim may be diminished depending on the circumstances (see, e.g., Anglo-French Arbitration 1977, Tunisia v Libya 1982, Black Sea Case 2009, Bangladesh/Myanmar 2012). Therefore, although in principle islands are not deprived of the rights bestowed on them by article 121 LOSC, they may not always be granted full effect in maritime boundary delimitations. However, islands cannot be denied their capacity to generate maritime zones and/or to be given decreased effect a priori; each case should be scrutinised according to its own unique terms. In any event, the Turkish argument that the Greek islands in the Aegean are located on the continental shelf of Turkey has been severely emaciated by the introduction of the EEZ concept and the prevalence of the “distance criterion” of maritime delimitation over the “geological” one. The distance criterion provides that the breadth of the maritime space afforded to a state should be calculated according to a fixed distance measured from the coast. The geological criterion, by contrast, would permit a state to claim the sea waters lying over the “natural prolongation” of its territory irrespective of the distance from its coastline. In the Nicaragua v Colombia case (2012), the ICJ put an end to the argument that one state’s islands cannot have their own continental shelf because they are located on another state’s continental shelf:

“The Court does not believe that any weight should be given to Nicaragua’s contention that the Colombian islands are located on “Nicaragua’s continental shelf”. It has repeatedly made clear that geological and geomorphological considerations are not relevant to the delimitation of overlapping entitlements within 200 nautical miles of the coasts of States.” (para 214).

The delimitation agreement
According to its well-established position that islands should not have the capacity to claim extended maritime zones when facing a bigger coastline, Turkey holds the view that Cyprus, being an island, has lesser effect in terms of maritime delimitation than the longer Turkish coastline, which is opposite the northern coast of Cyprus. Hence, as the agreement provides, the continental shelf delineation was carried out in accordance with equitable principles, resulting in a delimitation line closer to Cyprus at some points, which gives Turkey a more extensive maritime space than that allocated to the “TRNC”. Turkey was a fervent advocate of the equitable principles/relevant circumstances method during UNCLOS III, vehemently rejecting the median line/special circumstances method (UNCLOS III, Negotiating Group 7). The “equitable principles” method, which was elaborated in the 1969 Continental Shelf cases, stipulates that all relevant factors should be considered in order to reach an equitable result; however, the Court gave no further guidance as to how such an equitable result would be reached, rendering this method equivocal.

Although the debate over these two delimitation methods was intense, the LOSC did not manage to elucidate the vagueness surrounding the law of maritime delimitation; articles 74 and 83 LOSC merely strike a balance between the two opposing sides’ assertions. Nevertheless, there has been a growing trend towards assimilation of the two methods, early signs of which are discernable in several cases before international tribunals [Anglo-French Continental Shelf Arbitration (para 148), Jan Mayen case (para 56), Qatar v Bahrain case (para 231)]. At the moment, the view supporting the integration of the two methods seems to prevail [International Tribunal on the Law of the Sea (ITLOS) Bangladesh/Myanmar case (para 238)].

Of course, the looming reconciliation of these delimitation methods does not preclude states from agreeing to designate their maritime boundaries using only one of them. In the case under consideration, though, things are not that simple. Turkey concluded an agreement with a regime established in the aftermath of the Turkish military invasion of Cyprus in 1974, which entailed use of force in violation of article 2(4) UN Charter. The “TRNC” was established in 1983 in northern Cyprus, which has been occupied by the Turkish Armed Forces since 1974. Security Council resolutions 541/1983 and 550/1984 condemned this secessionist action and reaffirmed that the sole legitimate government on the island was the Republic of Cyprus. Furthermore, the European Court of Human Rights resolved that the “TRNC” is a “puppet state” under the “effective control” of Turkey [Loizidou v Turkey, App. No. 15318/89 (18 December 1996) paras 56 and 57; Cyprus v Turkey, App. No. 25781/94 (10 May 2001) paras 77, 78 and 80; Xenides-Arestis v. Turkey, App. No. 46347/99 (22 December 2005) para 27]. Also, the ICJ confirmed the illegality of the regime established in northern Cyprus in the Kosovo Advisory Opinion(para 81). Thus, the regime in northern Cyprus is illegal and cannot claim statehood, as it is ‘a putative state emerged … with the assistance of foreign military intervention’ (James Crawford, The Creation of States in International Law, 2nd edn OUP 2006, p. 144).

Conclusion
Consequently, the continental shelf delimitation agreement between Turkey and the breakaway “TRNC” is not valid under international law, as the latter party is not a legitimate state entity. It thus cannot be accepted by the DOALOS as a lawful submission and be published in the LSB. As expected, the foregoing development triggered a reaction from the Republic of Cyprus and Greece, whose governments deplored the submission and deemed the agreement unacceptable. Another controversial matter to be contemplated is whether this agreement would be binding upon the Republic of Cyprus should a solution to the Cyprus Problem –which concerns the enduring occupation of northern Cyprus by the Turkish Armed Forces since 1974- be reached, given the unequal terms of the delimitation. Further, it will be interesting to see whether Turkey will be keen to conclude any maritime delimitation agreements with Greece in the Aegean Sea/Eastern Mediterranean in light of the discovery of hydrocarbon deposits therein and, if so, according to which method such delineations will be effected.

This incident illustrates the pivotal role international law can play in international relations. Turkey, a non-state party to the LOSC, realised that unless it acted in conformity with international law, the delimitation agreement would not have any legal standing. Therefore, it followed the rules set forth by the LOSC regarding the deposit of geographic coordinates of the continental shelf purporting to legitimise the agreement, even though the instrument in question cannot have any legal consequences due to the unlawfulness of the “TRNC”. Although a non-state party to the LOSC, Turkey was willing or compelled to conform to rules with which it disagrees in order to promote its interests. Moreover, this incident supports the argument that observing international law norms is the best way for states to pursue their legitimate rights. The law of the sea must be the tool for resolving disagreements on maritime affairs in the region, especially in view of the discovery of new oil and gas resources and the prospective benefits they hold for states of the region.

* Nikolaos A. Ioannidis is a PhD candidate in Public International Law at University of Bristol. His doctoral thesis focuses on the application of the Law of the Sea in the Eastern Mediterranean in light of the discovery of hydrocarbon deposits in the seabed and subsoil of the region. Other fields of interest: Law of Armed Conflict, Constitutional Law, Jurisprudence.

Source

Biden: Cyprus May Become Global Natural-Gas Hub | Associated Press

NICOSIA, Cyprus May 22, 2014 (AP)

By MENELAOS HADJICOSTIS Associated Press

U.S. Vice President Joe Biden on Thursday underscored Cyprus' potential to become a key provider of natural gas to Europe, saying that newly discovered offshore reserves of the fossil fuel represented a unique opportunity for the divided island nation.

"Cyprus is poised to become a key player ... transforming the eastern Mediterranean into a new global hub for natural gas," Biden said as he toasted his host, Cyprus President Nicos Anastasiades, at lunch in the presidential palace.

Anastasiades said the gas deposits, which also have been found in Israeli waters, can offer "an alternative energy corridor leading to increased energy security."

The West wants to develop alternative suppliers of natural gas for Europe. Russia, the current top supplier, has threatened it could cut supplies or raise prices to European customers as part of diplomatic rifts over Ukraine.

Biden pledged U.S. government support for efforts to reunify the island. In 1974, Turkey invaded after a coup by supporters of union with Greece. For the past four decades the island has remained divided into a breakaway Turkish Cypriot north and an internationally recognized Greek Cypriot south.

Turkey, which doesn't recognize Cyprus' sovereignty, has voiced strong opposition to Greek Cypriot claims to the natural gas fields. It has repeatedly sent warship-escorted research vessels into Cypriot waters, where oil and gas companies are currently surveying, to underscore their own claim.

Only Turkey recognizes a 1983 Turkish Cypriot declaration of independence and maintains 35,000 troops in the north.

Turkish Cypriot leader Dervis Eroglu, who met separately with Biden, said afterward that Turkish Cypriots are entitled to the potential mineral bounty and asserted that "the world accepts that."

Anastasiades said he had "no doubt" that strong U.S. support would help secure Cyprus' rights to exploit its natural resources over Turkish objections.

Biden later dined together with Anastasiades and Eroglu at a restaurant inside the United Nations-controlled buffer zone dividing the capital, Nicosia. He said both leaders had agreed to speed up renewed peace negotiations.

Analysts say Israel, which already has developed natural gas fields in its waters, may want to utilize Cyprus as a terminus for future pipelines as its own industry expands in the eastern Mediterranean.

A reunified Cyprus would make it easier for Israeli and Cypriot gas exports to reach Europe through Turkey.

Link to source: http://abcnews.go.com/International/wireStory/biden-cyprus-turn-region-global-gas-hub-23823473

Greece Rekindles Search For Oil And Gas But Political Hurdles Remain | Forbes

5/22/2014 @ 9:17πμ 353 views

As much of the Eastern Mediterranean searches for ways to capitalize on the region’s new-found energy potential, Greece moved to kick-start its dormant energy exploration effort last week with the approval of three exploration licenses, each awarded to consortiums led by domestic firms.

Without Woodside, the Leviathan partners have a weaker hand with Turkey and Egypt | Globes

Leviathan partners plump for pipeline option

21/05/2014, 17:57

Amiram Barkat

Without Woodside, the Leviathan partners have a weaker hand with Turkey and Egypt.

Analysts and Tel Aviv Stock Exchange (TASE) investors were indifferent to the announcement by Australia's Woodside Petroleum Ltd. (ASX: WPL) that it had pulled out of the Leviathan deal. The share prices of Leviathan partners Delek Group Ltd. (TASE: DLEKG) and its energy units Avner Oil and Gas LP (TASE: AVNR.L), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) all fell in response to the cancellation of the farm-out deal. It can be assumed that had this announcement come a year ago, the impact on the shares would have been devastating.

Cancellation of the Woodside deal finds Delek with pretty good alternatives for the sale of natural gas and with enough capital to finance its share of Leviathan's development, due to the successful bond issue early this month and the sale of non-gas assets. The condition of Ratio, which owns 15% of Leviathan, is far less certain.

"We're continuing as usual," said Noble Energy chairman and CEO Charles Davidson, but the repercussions of the cancellation could be severe and painful, even if Leviathan's development goes ahead as planned in the short term. The gas field's marketing risks have shot up. The chances of closing a long-term gas supply contract in Asia at high prices have plummeted without the abilities and customers that Woodside would have brought to a deal.


Without the Woodside option, the Leviathan partners have a weaker hand in negotiations with customers and governments in Turkey and Egypt. It is enough for one more channel to fall apart to undermine confidence in Leviathan's development model. For the Israeli market, this is not just a blow to its image caused by the walkout of a foreign investor, but it is also the loss of the only company that could replace Noble Energy. It seems that Israel's total dependence on Noble Energy will only deepen.

The cancellation was no surprise given discord over the deal lately, topped by Woodside CEO Peter Coleman's theatrical walkout from the signing ceremony at the Sherover Promenade in Jerusalem.

A brief reminder: Delek controlling shareholder Yitzhak Tshuva and his partners brought Woodside to Israel in the belief that they lacked the capabilities to develop Leviathan on their own. They sought an energy major to inject capital and expertise and to bring Far Eastern customers who were prepared to pay top dollar for Israeli gas. Two years ago, everyone was talking about the need to build a huge liquefied natural gas (LNG) plant. The Tzemach Committee on gas exports recommendations were tailored to the size of this plant, which is now irrelevant.

In retrospect, it seems that the seeds of separation were sowed when the memorandum of understanding was signed in December 2012. Tshuva and his Israeli partners at Ratio were not pleased by the deal that Woodside offered, and it seems that the deal was forced on them by their American partner. This dissatisfaction was translated into the creation of an alternative market for Leviathan's gas.

Contacts with large customers in Turkey, Egypt, and Jordan were originally intended to assist in the effort to secure from Woodside a better deal. But this effort, handled by Delek Drilling CEO Yossi Abu, was so successful that Tshuva fell in love with the new option and set aside the dream of selling LNG to China and Japan. The turnaround was completed when Noble Energy also came on board and announced that the sale of gas via pipeline to regional markets was its preferred option.

Personal relations also contributed the failure of the deal. Delek executives' refusal to meet Woodside representatives for six months deeply insulted the Australians. Tshuva felt their response in his exchange with Coleman on the balcony of the King David Hotel in Jerusalem. Coleman told Tshuva to stay out of his business, and left the partners in Leviathan in the lurch.

Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014



Link to source: http://www.globes.co.il/en/article-leviathan-partners-plump-for-pipeline-option-1000940423

Noble Energy Announces Termination of Leviathan MoU With Woodside | Noble Energy

May 20, 2014

Noble Energy Announces Termination of Leviathan MoU With Woodside

HOUSTON, May 20, 2014 /PRNewswire/ -- Noble Energy, Inc. (NYSE: NBL) today announced that the parties have agreed to terminate the non-binding memorandum of understanding regarding the sale of interest in the Leviathan licenses, offshore Israel, to Woodside Petroleum.  Following termination of the agreement, working interests in the Leviathan Project remain as follows: Noble Energy as operator (39.66 percent), Delek Drilling (22.67 percent), Avner Oil Exploration (22.67 percent), and Ratio Oil Exploration (15 percent).

Charles D. Davidson, Noble Energy's Chairman and CEO, commented, "The plans for development of the Leviathan discovery have significantly changed since we began the search for a partner approximately two years ago.  Perhaps the most dramatic changes have been associated with the growth in the regional markets.  The emergence of these regional markets, which are accessible through pipeline outlet, has pushed the need for LNG into a later phase of development versus our earlier plans.  While we have not been able to reach a mutually acceptable agreement with Woodside, we continue to move forward with our partners and the Israel government with plans to develop this world-class asset for the benefit of all stakeholders."

Significant progress has been made on the development of the Leviathan field, following approval of Israel's natural gas export policy, an agreement with Israel's Anti-trust Authority, and receipt of the Development and Production Leases for Leviathan.  Noble Energy is targeting to sanction the initial phase of development at Leviathan by the end of 2014, with first production from the field currently planned for late 2017.

The initial development phase is planned to be a 1.6 billion cubic feet per day floating, production, storage and offloading (FPSO) system, to provide natural gas into Israel and surrounding regional markets.  Front-end engineering and design studies are ongoing for the second phase of development at Leviathan, which is anticipated to be a floating, liquefied natural gas (FLNG) production system.

The Leviathan Project is located offshore Israel in approximately 5,550 feet of water.  It has an estimated 19 trillion cubic feet of discovered natural gas resources.

Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production.  The Company has core operations onshore in the U.S., primarily in the DJ Basin and Marcellus Shale, in the deepwater Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa.  Noble Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL.  Further information is available at www.nobleenergyinc.com.

This news release contains certain "forward-looking statements" within the meaning of federal securities law.  Words such as "anticipates," "believes," "expects," "intends,"  "will," "should," "may," and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect Noble Energy' s current views about future events. They include estimates of oil and natural gas reserves and resources, estimates of future production, assumptions regarding future oil and natural gas pricing, planned drilling activity, future results of operations, projected cash flow and liquidity, business strategy and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this news release will occur as projected, and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, without limitation, the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other actions, the ability of management to execute its plans to meet its goals and other risks inherent in Noble Energy's business that are discussed in its most recent annual report on Form 10-K and in other reports on file with the Securities and Exchange Commission. These reports are also available from Noble Energy's offices or website, http://www.nobleenergyinc.com. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Energy does not assume any obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

The Securities and Exchange Commission requires oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The SEC permits the optional disclosure of probable and possible reserves, however, we have not disclosed the Company's probable and possible reserves in our filings with the SEC. We use certain terms in this news release, such as "discovered natural gas resources," which are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our most recent annual report on Form 10-K and in other reports on file with the SEC, available from Noble Energy's offices or website,

http://www.nobleenergyinc.com.  
SOURCE Noble Energy

Link to source: http://investors.nobleenergyinc.com//releasedetail.cfm?ReleaseID=849242

Woodside drops Leviathan, but small FLNG may still happen | Interfax

Woodside drops Leviathan, but small FLNG may still happen

By Leigh Elston and Sara Stefanini
Posted 21 May 2014 14:14 GMT

A Noble Energy and Transocean rig in the Tamar field offshore Israel. (Transocean)

After 18 months of negotiations, Woodside has finally abandoned a $2.7 billion deal to take a 25% stake in the Leviathan gas field, saying it was not commercially viable.

“All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal,” Woodside Chief Executive Peter Coleman said on Wednesday.

Woodside had been waiting for further clarity on Israel’s gas export tax before signing off on the farm-in. The Australian LNG player was said to be disappointed by the severity of the tax, having calculated the profitability of its Leviathan investment based on far lower taxation, Interfax understands.

The Perth-based company’s share price on the Australian stock exchange dropped immediately after the news was announced, but quickly bounced back and closed slightly higher than the day before.

However, some argue the growth in regional gas demand in the East Mediterranean had weakened the strategic case for bringing in an Australian LNG player with a customer base in East Asia.

The surge in interest in Israeli gas from private companies in Turkey, Egypt and Jordan over the past year “has pushed the need for LNG into a later phase of development versus our earlier plans”, Charles Davidson, chief executive and chairman of Noble Energy – operator of the Leviathan field – said on Wednesday.

Still, Woodside may yet join a slimmed down FLNG-led second phase of the Leviathan development. “We might have a smaller-scale joint project together with Woodside for FLNG for which we will allocate, say, 4 trillion cubic feet [113 billion cubic metres] of gas,” one partner close to the project told Interfax. “But for now we will continue full steam ahead with promoting pipeline exports of gas to neighbouring countries and domestic market.”

The project partners have an option to revive the non-binding letter of intent signed with the Levant LNG Marketing Corp. – a joint venture of Daewoo Shipbuilding and Marine Engineering, NextDecade and D&H Solutions – and the Tamar partners to build a 3 mtpa FLNG facility offshore Israel.


Tamar transfer

While the agreement was initially for the Tamar field, it would not be a problem to transfer it to Leviathan, a source told Interfax. Gazprom Marketing & Trading signed a heads of agreement with the JV early in 2013 to market the full 3 mtpa of LNG from the facility for 20 years.

“It is imperative the Leviathan partners develop the FLNG export scheme along with pipeline projects – and Woodside could have contributed a lot in terms of bringing in LNG clients, technology and financing,” said Amit Mor, chief executive of Israel-based financial consulting firm Eco Energy.

“Although the pipeline projects to Turkey, Egyptian liquefaction projects and Jordan are the most economically viable and strategically important, they are still prospective and are facing geopolitical challenges,” Mor said.

Even the strong financial support Woodside would have brought to Leviathan – which has an upstream cost estimated at $5 billion – became increasingly unnecessary over the course of negotiations. A $2 billion bond offering by Delek Group units Delek Drilling and Avner Oil in May was more than five times oversubscribed, demonstrating international investors’ financial appetite for the Leviathan project.

Cash flow from the Tamar gas field, which started production in April 2013, has also bolstered the finances – and market confidence – of Noble and Delek.

“At the time Woodside came in, [Delek group controlling shareholder Yitzhak] Tshuva did not have much cash – but that has changed dramatically,” said the source. “At this point, why [would he] reduce his stake in Leviathan to 30% when he could keep it at 45%?”

Delek’s successful bond issue has offered significant encouragement to minority Leviathan shareholder Ratio Oil. The company will now look to raise roughly $200 million through bonds, a source told Interfax. The Leviathan partners might also sell a 5% stake in the project to a financial partner to bring in additional cash.

“There have also been some general enquiries among financial investors to purchase a small stake of Leviathan – and it will be at a much higher price than Woodside would have paid,” the source said.
Even if Woodside’s experience became of diminishing strategic importance to the Leviathan partners, the threat of a major foreign investor withdrawing from the project – potentially delaying its development – may have proved a useful tool for bargaining with Israeli regulators, a source told Interfax.


Last-minute lease

In the hours before Coleman was due to sign the farm-in agreement on 27 March, the Leviathan partners secured both a lease for the Leviathan field development and reached a settlement with the anti-trust commissioner over Noble and Delek’s alleged monopoly over the gas market in Israel.

“I think everybody could read the new setting, and they got what they wanted. Negotiations with Woodside offered [the Leviathan partners] leverage vis à vis the ministries here; they reached an agreement with the anti-trust authority and secured a production licence with the ministry of energy,” the source said. “Once these were in place – and having more money than they had before – why should Noble and Delek reduce their stakes?”

Link to source: http://interfaxenergy.com/gasdaily/article/8428/woodside-drops-leviathan-but-small-flng-may-still-happen?dm_i=1ZRI,2H9IW,G3ABZ6,90VDO,1

Gas and CCS key to transition – Shell | Interfax

By James Batty, 20 May 2014 13:21 GMT

Oil and gas reserves will not become worthless in coming decades as a result of emissions reduction legislation, while gas and carbon capture technology will play an increasingly important role, Shell said in an open letter to shareholders this month.

The letter, signed by JJ Traynor, Shell’s executive vice president of investor relations, was written in response to activist shareholder groups that have warned future legislative changes could render oil and gas reserves uneconomic to produce. The most high-profile example this year was a report from the Grantham Institute that said the scale of carbon risks needs to be taken into account when pricing equities and bonds from oil and gas companies.

Activist groups

ExxonMobil published a similar response earlier this year as oil companies take a harder line with activist groups seeking to divert money from oil and gas stocks towards renewable energy companies (see Switch to gas key to reducing emissions – Exxon, 1 April 2014).

“While the ’stranded asset’ notion may appear to be a strong and thought-through case, it does have some fundamental flaws and there is a danger that some interest groups use it to trivialise the important societal issue of rising levels of CO2 in the atmosphere,” Traynor said in the letter.

He claims the activist groups fail to acknowledge the growing demand for energy; the crucial role of carbon capture and storage (CCS) technology; and the prospects for the gas, bioenergy and energy efficiency sectors.

The letter was dated 16 May, but was published on Tuesday to coincide with Shell’s annual shareholder meeting in the Hague.

In a similar way to Exxon’s response, Traynor also accused the activist groups of distracting attention from the need to meet growing energy demand in developing countries.

He added the company’s response to the threat of climate change is to expand its gas business, as well as investing in low-carbon biofuels, CCS technology and energy efficiency measures.

“The role of CCS in helping the world to avoid the worst effects of climate change is critical,” he said, outlining Shell’s view that fossil fuels will remain the dominant energy source until 2050.

The company uses a price of $70-110 per barrel of oil, $3-5/MMBtu of gas, and $40 per ton of CO2 when assessing the viability of projects.

He concluded that, while Shell does believe a “fundamental transition of the energy system will be needed”, it will “take considerably longer than some alarmist interpretations of the unburnable carbon issue would have the public believe”.

SOURCE

Woodside terminates Leviathan deal | Jerusalem Post

Woodside terminates Leviathan deal

By SHARON UDASIN

05/21/2014 09:34

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After months of negotiations, Woodside says that the parties failed to reach a commercially acceptable outcome.

Leviathan holds 453 billion cu.m. of gas [file] Photo: Courtesy of Albatross

Australian hydrocarbon firm Woodside Energy has officially withdrawn from a $2.71 billion deal to acquire a 25 percent share of the Leviathan natural gas reservoir, the company announced overnight on Tuesday.

The termination of the agreement follows months of uncertainty regarding the expected partnership, due to disputes between the Australian firm and the Israeli Tax Authority. After signing a memorandum of understanding with the Leviathan partners on February 7, Woodside was expected to sign an official agreement for the acquisition on March 27. Yet by that day's end, the agreement did not pan out due to the disagreements between Woodside and the Tax Authority.

Related:

• Woodside entrance into Leviathan gas field consortium still uncertain

In the official announcement overnight on Tuesday, Woodside said that negotiations among the parties failed to reach a commercially acceptable outcome, which would have enabled the full-term agreements to be implemented.

Woodside CEO Peter Coleman stressed that the decision to pull out of the deal was difficult and not taken lightly.

“All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal,” Coleman said. "While Woodside’s commitment to growth is strong, even stronger is our commitment to making disciplined investment decisions.”

With sufficient hydrocarbon supplies for decades of domestic use and export, Leviathan – located about 130 km. west of Haifa – is estimated to contain about 535 billion cu.m. (18.9 trillion cu.ft.) of natural gas and 34.1 million barrels of liquid condensate.

Houston-based Noble Energy holds 39.66% of the Leviathan field, Delek Group subsidiaries Delek Drilling and Avner Oil Exploration each hold 22.67%, and Ratio Oil Exploration owns 15%. The reservoir is expected to be in operation sometime in 2017.

"I would like to acknowledge and thank the Leviathan Joint Venture participants and the Israeli Government for working with us," Coleman said.

Following the termination, Noble Energy Chairman and CEO Charles Davidson stressed that development of the field would go on, despite the loss of the agreement.

"The plans for development of the Leviathan discovery have significantly changed since we began the search for a partner approximately two years ago," Davidson said. "Perhaps the most dramatic changes have been associated with the growth in the regional markets.  The emergence of these regional markets, which are accessible through pipeline outlet, has pushed the need for LNG [liquefied natural gas] into a later phase of development versus our earlier plans."

Although an export policy was approved by the government on June 23, 2013, capping exports at 40%, the question has long remained to whom the Leviathan partners will export the gas.

In January 2017, the Leviathan partners signed a $1.2b. sale agreement with the Palestine Power Generation Company, through which the firm would buy around 4.75 billion cu.m. of gas for a period of 20 years – to fuel a future 200-megawatt power plant in Jenin.

Most recently, the partners of the neighboring, grid-connected Tamar reservoir – of which Noble Energy and Delek are also the major stakeholders – signed a letter of intent two weeks ago with Spanish firm Union Fenosa Gas to supply gas to the company's existing gas liquefaction facilities in Egypt. If that letter of intent progresses into a real agreement, the parties would partake in a 15-year contract with a total gross sale quantity of up to 71 billion cu.m. of gas.

In February, the Tamar partners also signed a $500m. deal with the Jordanian firms Arab Potash and Jordan Bromine to provide 1.8 billion cu.m. of gas to the companies over 15 years, beginning in 2016.
For exports outside of the immediate neighborhood, experts have debated whether a pipeline to Turkey, an LNG plant onshore in Israel, a shared LNG plant onshore in Cyprus, a floating LNG plant, use of the Egyptian LNG facilities or some combination of these options would make the most sense. Through the Turkish pipeline, the gas could reach European buyers, while through an LNG plant, the hope would be to reach the Asian market.

As far as Leviathan in particularly is concerned, Noble Energy said on Tuesday overnight that the initial development phase for the reservoir will involve building a 0.045 billion.-cu.m.-per-day floating, production, storage and offloading (FPSO) system, to provide natural gas to Israel and surrounding regional markets. Front-end engineering and design studies would continue, however, for the second phase of development, which will likely involve a floating liquefied natural gas (F-LNG) production system, Noble Energy said.
When Woodside was expected to be involved in the reservoir's development, the company had prioritized the idea of F-LNG export for Leviathan, stressing that this would be the preferred method of export. As part of the terminated deal, Woodside would have operated any liquefied natural gas development for the reservoir.

The Leviathan partners, however, remained undeterred following the deal's failure.

"While we have not been able to reach a mutually acceptable agreement with Woodside, we continue to move forward with our partners and the Israeli government with plans to develop this world-class asset for the benefit of all stakeholders," Davidson said.


Link to source: http://www.jpost.com/Business/Business-News/Woodside-terminates-Leviathan-deal-352893