The Leviathan project takes another hit after the Palestine Power Generation Co. (PPGC) gave its notice to cancel its 20-year agreement to supply natural gas for Leviathan, offshore Israel.
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Map of Israel. From Noble. |
Leviathan is located on the Rachel and Amit licenses, in 5550ft of water and has an estimated 19 Tcf of discovered natural gas resources. The initial development plan for Phase 1 of the field was estimated to be US$6.5 billion.
PPGC entered into an agreement last year to supply natural gas for a period of 20 years, in addition to supplying a total of up to 4.75 Bcm of gas for the Noble Energy-operated Leviathan project.
According to the Delek Group, on 10 March PPGC gave a conditioned cancellation notice to the Leviathan partners on the supply agreement due to the non-fulfillment of the conditions precedent set forth in the agreement, and essentially non-receipt of the approval of the Antitrust Authority, the delay in approving the development plan of the Leviathan project as well as other regulatory approvals required by law, as set out in the supply agreement.
The cancellation will be effective within 30 days, unless approval from the Antitrust Authority is received before that time.
Earlier today, BW Offshore announced it is selling its very large crude carrier (VLCC), the BW Opal to BW Group in an $85.5 million deal. In BW Offshore's 3Q 2014 report, the company had the BW Opal destined to be used for the Leviathan project, however since Leviathan is on hold, the company is moving forward with other plans for the vessel.
Noble suspended initial developments of Leviathan and further investments in the expansion of Tamar in February until regulatory issues are resolved with Israel. Noble President and CEO David Stover said that a predictable and stable regulatory environment is a critical requirement in decisions related to major energy development projects.
Noble and its Leviathan partners reached an agreement in 2014 with the Israel Antitrust Authority for the consent decree that included the divestiture of the Tanin and Karish gas fields, in an effort to support competition of supply, and move forward the development of Leviathan. Noble had anticipated that the first phase of development at Leviathan to be approved in 2014.
Stover said that the recent decision by the Antitrust Authority to not submit the agreed consent decree for final approval was a direct reversal of their prior agreement, and another example of the uncertain regulatory impairment in Israel.
In December, Noble and its Leviathan field partners were advised by the Israel Antitrust Authority of its decision to not submit the consent decree to the Antitrust Tribunal for final approval.
The Consent Decree agreement was originally reached in March 2014.
Noble is the operator in the Leviathan Project with 39.66% interest. Partners include Delek Drilling (22.67%), Avner Oil Exploration (22.67%), and Ratio Oil Exploration (15%).
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