Noble Energy says a new ruling by Israel's Supreme Court could further delay the Leviathan offshore mega-project in the Levantine Basin in the Mediterranean Sea.
The Houston-based explorer said that the court affirmed Israel's natural gas regulatory framework, with the exception of the stability provisions. The court concluded that the Israeli government should provide stability assurances and provisions through an alternate legal mechanism, and gave the government up to one year to resolve the issue. Thus, hitting the brakes on Leviathan's development.
In late February, the Leviathan partners submitted a new plan for the field to the country's authorities that decreased the development cost by some US$1 billion, increased production capacity by 5 Bcm to 21 Bcm annually, and aimed to bringing the project onstream by Q4 2019. However, with the ruling, this date may be set back further.
"The court's ruling, while recognizing that timely natural gas development is a matter of strategic national interest for Israel, is disappointing and represents another risk to Leviathan timing," said David L. Stover, Noble Energy's chairman, president, and CEO. "Development of a project of this magnitude, where large investments are to be made over multiple years, requires Israel to provide a stable investment climate.
"Noble Energy has consistently maintained that stability is a minimum condition for project development, and our position has not changed," he added. "As we have stated before, we will vigorously defend our rights related to our assets to protect shareholder value. It is now up to the government of Israel to deliver a solution which at least meets the terms of the framework, and to do so quickly."
The Times of Israel reported on 27 March that the stability clause, which the court found troubling, stated that the government could not impose regulatory changes, such as the break up of monopolies, on the Leviathan partners for a 10-year period.
Israel's Prime Minister Benjamin Netanyahu, expressed his frustration with the court ruling, saying it "severely threatens" the country's ability to develop its natural gas reserves.
"Israel is seen as a state with excessive judicial interference in which it is difficult to do business," he said on 27 March. "Certainly, nobody has any reason to celebrate that the gas is liable to remain in the depths of the sea and that hundreds billions of shekels will not reach the citizens of Israel.
"We will seek other ways to overcome the severe damage that this curious decision has caused the Israeli economy."
Leviathan, one of the largest discoveries in the past decade, was discovered in 2010, and is estimated to contain 22 Tcf of natural gas. The field is in the Mediterranean Sea, some 130km off the coast of Israel in 1600m of water.
Noble operates Leviathan with 39.66% interest. Partners include Delek Drilling (22.67%), Avner (22.67%), and Ratio Oil Exploration (15%).
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See OE's past Leviathan coverage here.
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