Noble Energy is suspending any further investments in the expansion of Tamar, and initial development of Leviathan until regulatory issues are resolved with Israel.
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Image of the Tamar field. From Delek. |
In the company’s 4Q and full year 2014 earnings call, Noble President and CEO David Stover discussed the regulatory environment in Israel.
“Resolution of the antitrust matter along with progress on a number of additional regulatory matters is required before we can proceed with significant further investment in Israel's energy sector,” Stover said. “A predictable and stable regulatory environment is a critical requirement in decisions related to major energy development projects.”
An agreement was reached in 2014 between Noble Energy, its Leviathan partners, and 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.
Leviathan is Noble’s largest exploration discovery in its history with an estimated 19Tcf of gross natural gas resources, representing the largest deepwater natural gas discovery in the world in over a decade. The Leviathan project is located on the Rachel and Amit licenses offshore Israel in 5550ft of water. 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.
Stover went on to say that discussions continue with the government in an effort to establish the regulatory framework necessary to progress development of resources.
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Leviathan map. From Noble. |
“While no agreement has been reached to date, we remain committed to finding appropriate and workable solutions. However, we are also prepared to vigorously defend our rights related to our assets in Israel,” Stover said.
Stover noted that Israel has only been producing gas for a little over a decade. He said that the discoveries of the giant Tamar and Leviathan fields provide the opportunity for the substantial regional exports, which is changing the energy landscape of the Eastern Mediterranean.
“We're excited to be leading the way, as further expansion of Tamar and initial development of Leviathan have the potential to materially expand energy, economic, and environmental benefits to Israel and the region,” said Stover.
Stover said that Tamar continues to perform exceptionally well, both from the reservoir and facilities standpoint, and has resulted in recent record production days in excess of 1 Bcf of natural gas and gross sales.
The company has been working with Israel’s government for more than 15 years, to explore for, develop, and produce natural gas. Stover said Noble’s success has delivered substantial value to Israel in terms of reduced fuel and electricity costs, as well as a new energy security.
Noble has suspended essentially all investment in Israel, except for its Ashdod compression project, which is nearly complete.
In December, Noble and its Leviathan field partners were advised by the Israel Anti-trust Authority of its decision to not submit the consent decree to the Anti-trust 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%).
Noble continues to progress in the Eastern Mediterranean, with plans for development in Cyprus. The company was able to sign multiple letters of intent for regional export in 2014, with the most recent being with an Egyptian customer to supply interruptible volumes from Tamar. The terms of the LOI include up to 250 MMcft/d, with pricing equivalent to other export LOIs that the company has signed.
The company’s exploration investments for 2015 company-wide will be about 5% of total planned expenditures; lower than past years given the environment.
Read more:
Noble Energy releases Leviathan
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