Woodside happy to push on with Israeli LNG deal

Woodside Petroleum has played down suggestions the Leviathan gas project is under threat from regulatory hurdles. CEO Peter Coleman said he was confident the Leviathan deal would go ahead, signaling the company’s continued support for the project.

In December Woodside announced it struck a US$696 million deal with US-based Noble Energy that gives Woodside a 30% interest in the Leviathan gas prospect off the coast of Israel.

Analysts have questioned whether the Israeli government will be willing to enact laws allowing the export of liquefied natural gas (LNG), given concerns about Israel’s limited domestic gas resources—an issue that could affect export approvals for Leviathan.

Woodside said it will consider a final investment decision on a domestic gas development related to Leviathan during the current year.

Woodside increased its capital expenditure budget for 2013 and forecast it would spend about US$1 billion on Leviathan.

Israeli media reported the head of the Israel Antitrust Authority will soon decide whether a cartel exists between Noble Energy and its partners in the Leviathan field, including Delek Drilling, which could have regulatory implications for the project.

Everyday investors should note that Woodside has committed capital and expressed confidence in the Leviathan deal, but the project faces regulatory questions in Israel—particularly around LNG export laws and an antitrust review involving partners like Noble Energy and Delek Drilling.

Key risks to monitor are whether the Israeli government will approve laws permitting LNG exports and the outcome of any antitrust review by the Israel Antitrust Authority into relationships among partners such as Noble Energy and Delek Drilling; both could affect project timing and returns.