Shell's BG takeover could end Leviathan Egyptian deal

Leviathan

Shell's shareholders have approved buying BG, probably ending the Leviathan partner's hopes of selling gas to Egypt.

Royal Dutch Shell shareholders have voted by a clear majority of 83% to accept the $70 billion takeover of BG Group (British Gas). The acquisition, assuming it now goes through, is likely to endanger the potential $30 billion for natural gas being negotiated between the Leviathan partners and BG. Shell operates in Qatar and may soon possibly operate in Iran and is likely to think twice before signing such a major contract for Israeli natural gas.

Tomorrow, BG's shareholders will vote whether to accept the deal but it would be a major surprise if they did not as they are the big winners in the deal. When the deal was signed oil was selling for $60 a barrel - it is now below $30.

In June 2014, the Leviathan partners signed a non-binding letter of intent with BG to supply 105 BCM of natural gas to BG LNG plant at Idku in Egypt. The deal over 15 years would have been worth $30 billion. But the deal was held up due to Israel's antitrust prevarication and since then energy prices have plummeted and now Shell is acquiring BG. The deal would have accounted for about one sixth of the gas in Leviathan and allowed for its development.

Shell does not mention either Israel or Egypt in the list of countries on which it plans focusing. Moreover, Shell plans firing tens of thousands of employees and selling $30 billion worth of assets.

The Leviathan partners have understood for some time that the deal is in danger and over the past month have pushed ahead with intensive talks with BG in unsuccessful attempts to reach an agreement.

Noble Energy Inc. (NYSE: NBL) owns 39.66% of Leviathan, Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 22.67% and Ratio Oil Exploration (1992) LP (TASE:RATI.L) owns 15%.

Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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