Israeli Panel Helps Clear Up Uncertainty With Gas Export Tax Model
JERUSALEM, March 25 (Reuters) - An Israeli government panel on Tuesday presented its preferred model for taxing natural gas exports, ending months of uncertainty blamed for delaying a deal for Woodside Petroleum to buy into the Leviathan offshore gas field.
Australia's Woodside, an LNG specialist, has agreed to buy a 25 percent stake in Leviathan for up to $2.71 billion, putting a value on the field of $10.8 billion.
Woodside is due to finalise the deal - first announced more than a year ago - with the U.S.-Israeli consortium developing the field in the coming days.
The panel's taxation model is based on "netback", which takes the price of gas in the target export market and subtracts costs of operation for determining how much tax the participating energy companies must pay, a Finance Ministry statement said.
A source close to the Leviathan partners told Reuters that the panel's model, which still need cabinet and parliamentary approval, "brings much needed regulatory certainty that will help the deal move forward".
Israel has set a sliding scale for taxing domestic sales of its newfound natural gas, but Woodside has said that until an export tax policy is set, there remains a lack of regulatory certainty needed to enter into the project.
The netback approach will likely have greater impact on exports to distant markets, such as Asia, where the target price is higher and there are extra costs for liquefaction and transport.
Were gas to be sold to neighbours via pipeline, it could be set up so the sale occurs at the field, in which case the regular domestic tax rate would apply.
"The amendment is meant to ensure that the public receives its full share coming from Israel's natural gas resources and, in parallel, to create a supportive environment for developing the natural gas industry," the Finance Ministry said.
(Reporting by Ari Rabinovitch; editing by Jason Neely)
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