Woodside pulls out of Leviathan deal

The Australian company had sought to buy 25% of the Israeli gas field for $2.71 billion.

Australian company Woodside Petroleum has finally withdrawn its intention to buy 25% of the rights in the Leviathan gas field off Israel's coast for $2.71 billion.

In an announcement released yesterday in Australia, Woodside CEO Peter Coleman said that the negotiations between the sides that began in late 2012 had not brought about the hoped-for result.

"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, adding, "While Woodside's commitment to growth is strong, even stronger is our commitment to making disciplined investment decisions."

In response to Woodside's announcement, US company Noble Energy, the partner operating the Leviathan reserve, released a statement confirming that the negotiations had failed. It emerges from the statement that the chief reason for the failure was a fundamental disagreement between Woodside and the Leviathan partners (Noble Energy Mediterranean Ltd, Delek Drilling LP, Avner Oil Exploration LP and Ratio Oil Exploration) over the order of priorities in developing the reserve.

Woodside, Australia's largest energy company, specializes in developing liquefaction installations and in selling gas to customers in China and Japan. The current development plan for Leviathan, however, envisages liquefaction facilities only for the second stage of development. In the initial stage, up to the end of 2017 or the beginning of 2018, the reserve will be developed only for the local market and customers in neighboring countries, such as Jordan, Turkey, Egypt and Cyprus.

Noble Energy CEO Charles Davidson said that although agreement had not been reached with Woodside, the partners would continue to develop the reserve in coordination with the Israeli government.

A month ago, "Globes" reported that there was personal tension between the Woodside CEO and both Davidson and Delek Group controlling shareholder Yitzhak Tshuva.

Published by Globes [online], Israel business news - - on May 21, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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