Noble to start work to develop Israel’s Leviathan field

By Yaacov Benmeleh on 6/22/2016

TEL AVIV (Bloomberg) -- The owners of Leviathan, Israel’s largest natural gas field, began moving on development plans delayed for years by political, legal and regulatory wrangling. The companies’ stocks gained as developers reaffirmed that production was on track to begin in 2019.

The Leviathan partners authorized Texas-based Noble Energy Inc., a 40% stakeholder in the field, to sign a contract for engineering work worth an estimated $120 million, according to a Tel Aviv Stock Exchange filing on Wednesday. Designing the platform is the first stage of the gas field’s development, Israel’s Delek Drilling, another stakeholder, said in an emailed statement.

“The complex work of engineering and designing the production platform will provide the engineering solution for the supply of gas to the domestic market and regional export,” Yossi Abu, Delek Drilling CEO, said in the statement. “We will also advance tenders for the supply of equipment and services, in order to make a final investment decision by the end of 2016 and be able to pump gas by 2019.”

Financing Talks

The last obstacle to developing the field was swept away last month when the government approved the companies’ two-stage plan to drill a total of eight wells producing 21 Bcm of gas a year. The partners are in talks with large banks to finance the infrastructure project, the largest in Israel’s history. The gas companies are seeking about $4 billion, Bloomberg reported in March.

Production from Leviathan, discovered in 2010, has been delayed by political and legal challenges and the absence—until last month—of a government policy on the country’s fledgling natural gas industry. Things stalled outright in December 2014, when the antitrust commissioner forced new regulatory terms onto the companies, setting off a back-and-forth tussle that included public protests, political debates and High Court rulings.

Delek Group Ltd., which owns about 45% of the field through its units Avner Oil Exploration LLP and Delek Drilling, rose 2.4% to 761 shekels, the highest level in more than 5 months, at 10:52 a.m. in Tel Aviv. Ratio Oil Exploration 1992 LP, which holds a 15% stake, added 2% to reach a three-week high.

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