Delek deadline looms on $1.5b Leviathan loan

Leviathan
Leviathan

Delek must decide if it wishes to proceed with the loan from HSBC and JP Morgan amid uncertainty over the gas agreement with Jordan.

Today is the last possible date for Delek Group Ltd. (TASE: DLEKG) energy exploration and production units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) to cancel the letter of commitment to take financing of $1.5-1.75 billion from HSBC and JP Morgan for the development of the Leviathan gas field. However, due to the delay in any announcement by the Leviathan operator Noble Energy Inc. (NYSE: NBL) about closing its financing for the field's development, it is unclear what path the Israeli partnerships will choose.

Sources in the energy industry believe that the matter will only be decided at the last moment but that there is a greater likelihood that Delek will go ahead with the loan because Noble Energy's delay in obtaining financing is "only technical." On the other hand, there is a possibility that Delek will open up the agreement and set a later deadline for canceling its commitment to take the loan, assuming the banks do not refuse such a request.

Delek declined to comment on the matter.

Two weeks ago, there was speculation that Noble Energy, which holds 39.66% of the Leviathan field, is delaying obtaining financing for developing the Leviathan field due to uncertainty about the 15 year deal to supply Jordan with 45 billion cubic meters of natural gas. The Israeli and Jordanian governments have been conducting talks in recent weeks to finalize the agreement but no details have been disclosed.

Noble Energy is believed to be concerned that opponents of the agreement will blow up the gas pipeline in Jordan in a similar way that the export of gas from Egypt to Israel was derailed by terrorists in Sinai.

Published by Globes [online], Israel business news - www.globes-online.com - on February 20, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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