Woodside Delays Signing Landmark Israeli Gas Field Deal
|Sonali Paul & Ari Rabinovitch
|Friday, March 28, 2014
MELBOURNE/JERUSALEM, March 28 (Reuters) - Australia's Woodside Petroleum Ltd has delayed signing a landmark agreement to take up to a $2.7 billion stake in Israel's Leviathan gas field, but said on Friday it was in talks to overcome remaining issues.
The agreement was supposed to be signed on March 27, however Woodside has been unwilling to sign until it is comfortable with the Israeli government's plans for taxing export volumes, an analyst said.
"Discussions continue with the parties and the Israeli government with a view to resolving the remaining issues and executing definitive agreements," Woodside said in a statement to the Australian stock exchange.
The Israeli government this week outlined its preferred regime for taxing the exports, but that didn't match the assumptions Woodside had in its models for the project, UBS analyst Nik Burns said.
"Ultimately it's about getting more comfort with the tax treatment, particularly around gas export volumes. The rate of return in the tax calculations for floating LNG seems to be the major issue there," he said.
Woodside declined to comment on the hurdles to an agreement.
By bringing in Woodside, a liquefied natural gas (LNG) specialist, the U.S.-Israeli group developing the project and its 540 billion cubic meters (19 trillion cubic feet) of reserves are looking to access a broad market, especially Asia.
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