Shortly before Houston-based Noble Energy released its Q3 2015 earnings, Israeli Prime Minister Benjamin Netanyahu said that the country intends to fast-track natural gas development, especially now that the country’s economic minister, Aryeh Deri, announced intentions to resign. Deri was a hold out, impeding the signing of the new frame agreement that will allow Noble and its local partners to develop its mega gas find Leviathan.
"Today, we are taking a major step toward advancing the supply of gas in the State of Israel,” Netanyahu said on Sunday. “Natural gas will be the number one growth engine in Israel in the coming years. We are talking about an investment of very many billions of dollars already over the next two years and the creation of related industries, which will provide many jobs for the citizens of Israel.”
Deri is not the first Israeli official to resign over the framework. In August, the Director General of the Israeli Antitrust Authority, David Glio, resigned his position. Glio served as the main opposition to Noble Energy’s Leviathan plans. He had previously requested that Noble and its partners, Delek Group, sell interest in the producing Tamar field in order to maintain interest in Leviathan, due to monopoly concerns in the region. Due to those uncertainties in the region, Noble Energy announced in late February that it would suspend any further investments in the expansion of Tamar, and initial development of Leviathan until regulatory issues are resolved with Israel.
Deri's resignation and Netanyahu's pledge to move the framework forward is a welcomed move by Noble and Delek Group, which intended to achieve first gas from Leviathan by 2018, prior to the delays from the antitrust authorities. However, Leviathan may not achieve first gas by the end of this decade.
“Now that the framework has been approved, we have been looking at a time frame of a year to move all of this to FID (final investment decision),” said David Stover, Noble Energy’s president and CEO, during the company’s earnings call on Monday. First production, he said, would come about 3-4 years after that.
The Houston-based explorer reported a net loss of US$283 million for the quarter. In contrast, Noble reported a net income of $419 million in Q3 2014.
Stover said the company is focused on reducing quarterly capital spending, increasing operational efficiency and improving operating costs. He said the company has cut its capital expenditures for the full year 2015 down to less than $3 billion.
Image: Prime Minister Benjamin Netanyahu. Photo by Amos Ben Gershom.
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