Woodside signs $2.5bn Leviathan gas field deal

As reported in The Australian on Monday, the owners of Leviathan were in Australia this week to try to finalise a year-old non-binding deal, worth up to $US2.3bn.

Woodside has been forced to pay more to enter the gas field because its owners want to pipe a lot of the gas to Turkey and other regional countries, meaning it will cost less to develop than the previous LNG-centred plans.

Under the new memorandum of understanding, Woodside will take a 25 per cent stake, down from 30 per cent in the previous deal.

The terms of entry are $US850 million up front and $US350m on a final investment decision.

After this, Woodside will pay up to $US1.3bn for a 5.75 per cent royalty on well-head (before LNG processing or piping costs) export gas revenue after at least 2 trillion cubic feet have been exported from the Leviathan field.

It will also pay a royalty of 2.5 per cent on any commercial oil production from the deep prospect in the Mesozoic after development costs.

The deal is conditional on a fully-termed agreement and certain policy, tax and regulatory approvals from Israel.

Leviathan is operated by US-based Noble Energy and the other parties are Israel’s Delek Group and Ratio Oil.

Published by:  www.theaustralian.com.au