Leviathan partner says they’re concerned, resolute following High Court ruling

By
March 29, 2016 01:39

The High Court’s ruling on Sunday supported most of the gas framework, with the exception of a stability clause, putting the government in charge of providing stability insurance.

2 minute read.



THE TAMAR gas field platform juts above the Mediterranean

THE TAMAR gas field platform juts above the Mediterranean. (photo credit:MARC ISRAEL SELLEM)

The head of Noble Energy said Sunday’s High Court decision striking down Prime Minister Benjamin Netanyahu’s natural gas outline was “disappointing and represents another risk to Leviathan’s timing.”

“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,” David L. Stover, the CEO, chairman and president of the Texas-based company, said on Monday.

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Despite this, the determination to stick to the development timeline – to have natural gas flowing by 2019 – remains.

The High Court’s ruling on Sunday supported most of the gas framework, with the exception of a stability clause, putting the government in charge of providing stability insurance.

Immediately following Sunday’s decision, Stover nonetheless expressed appreciation that the court acknowledged the need for regulatory stability.

He said stability is a “minimum condition” for the continued development of the 621-billion-cubic-meter gas field, but the company, which is a 39.66 percent stakeholder in the reservoir, will be steadfast in defending its rights.

The court’s ruling comes only two weeks after Stover and other company officials presented National Infrastructure, Energy and Water Minister Yuval Steinitz with a Leviathan development timetable, as well as data on the gas field’s development.

He reportedly promised that development would stick to the timetable or even develop faster than expected, notwithstanding volatility in the global energy market.

In late January, both Delek and Bini Zomer, Noble Energy’s Israel country manager, said if the framework is approved by the end of 2016, the partners hope to have gas flowing by the end of 2019.

On Monday, Delek CEO and President Asaf Bartfeld emphasized to investors that the framework was not canceled and there is still a year to make the necessary changes.

He said they would continue to move forward to develop Leviathan.

Yossi Abu, CEO of Delek Drilling LP and of Avner Oil and Gas Exploration LP, said “it would have been much more simple and faster if the High Court would have turned down the objections to the stability clause], but now at the practical level, we will continue to work fast to find alternatives in the coming months.”

He said the company will work alongside the government to find “a number of alternatives that they would need to hold by.”

“This is exactly what we, along with our partners, intend to do right away,” Abu said.

Delek Group subsidiaries Delek Drilling and Avner Oil Exploration each hold 22.67% share in Leviathan. Ratio Oil Exploration has a 15% share.

Abu said that possible options for moving forward could involve legislation, “including general legislation and a national project law, or a specific law, such as one similar to the [Sheshinski bill on oil and gas taxation] or, as the court suggested, there could be a law regarding economic parity.”

Abu explained that this alternative would not provide a guarantee of stability but would provide compensation if the economic value of the project were to be affected.

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