Time for Turkey and Egypt to search for plan B? Israel's Leviathan gas project 'on hold'
The partners in Leviathan have rebuffed an offer by Australia's Woodside Petroleum Ltd. (ASX: WPL) to sign an agreement for the sale of 25% of the license rights for $2.71 billion. Sources inform ''Globes'' that, two weeks ago, Woodside notified Noble Energy Inc.(NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) that its dispute with the Israel Tax Authority, which had prevented the signing of the agreement on March 27, has been solved. However, the partners, led by Delek, told Woodside that they would not sign an agreement until all the issues between the company and various ministries are clarified, in order to prevent another embarrassment like Woodside's walk out from the March 27 signing ceremony.
The sources said that, behind the Leviathan partners' stubbornness, lies personal animosity by Delek controlling shareholder Yitzhak Tshuva, and to some extent by Noble Energy chairman and CEO Charles Davidson, toward Woodside CEO Peter Coleman over his conduct. At the heart of the issue is a bitter exchange between Tshuva and Coleman, who insulted Tshuva.
Shortly after Coleman failed to turn up for the signing ceremony at the Sherover Promenade in Jerusalem, Tshuva and his aides went to the King David Hotel, where the Woodside executives were staying. During a stormy meeting on the hotel balcony, Tshuva offered to discuss the tax issues with Coleman in order to find a solution that would allow the ceremony to go ahead as scheduled.
According to one version of the incident, Tshuva was even prepared to discuss the price that Woodside would pay for the Leviathan stake, but that Coleman rejected the offer. He told Tshuva to mind his own business, deeply offending him.
Noble Energy executives are also disappointed by Woodside's conduct that it did not update Nobel Energy in a timely manner about its dispute with the Tax Authority. Davidson, who made a special trip to Israel to participate in the signing ceremony, was forced to return to the US empty-handed. On Monday, he told investors that the Leviathan partners were prepared to develop the project without Woodside.
Davidson said that Woodside had not completed the clarification of its dispute with the Tax Authority, but a check by "Globes" found that the parties have reached a compromise on the accelerated amortization, under which Woodside's investment will amortized proportionately to the dwindling of the gas field.
Despite the current problems, a farm-out agreement between the partners in Leviathan and Woodside may still be signed, possibly within days.
Noble Energy said in response that there is no delay as far as it was concerned.
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