Woodside's Leviathan Deal May Collapse

The deal in which Australia's Woodside Petroleum is due to acquire 30% of the rights to the Leviathan gas reservoir for $1.25 billion is close to collapse, Globes has reported.

A memorandum of understanding was signed by Woodside with Noble Energy, Delek Group Ltd and Ratio Oil Exploration in December 2012. As per the memorandum, the Australian firm would make a $696 million down payment at the signing of the deal, which was scheduled for February, but has been frozen until the Israeli government decides on its gas export policy, Globes said.

Apart from delay in decision on exports, another factor that is turning out to be hurdle for Woodside is Leviathan partners’ decision to build a pipeline to neighbouring countries, apparently Turkey instead of a LNG plant, Globes said.

Woodside’s idea was to build an LNG plant and supply the gas to its customers in China and other fast east countries.

According to Globes, Noble Energy CEO Charles Davidson told analysts on Friday that the company had changed its priorities and "our thinking right now is the Leviathan is going to be a combination of an LNG export as well as domestic sales and we are continuing to move those plans forward."