(photo credit: Courtesy of Albatross)
After a last minute dispute thwarted Woodside Energy’s entrance into the Leviathan natural gas partnership on Thursday, opposition MKs warned the government to resist pressure to give in to corporate demands over the weekend.
The Australian hydrocarbon firm was expected to sign a $2.71 billion agreement at the King David Hotel in Jerusalem to acquire a 25 percent share of the large natural gas reservoir.
Yet by the evening’s end there was no agreement, due to differing views between Woodside and the government over taxation terms.
Following these events, opposition MKs, in particular, MK Zahava Gal-On (Meretz) and Shelly Yacimovich (Labor), grew particularly vocal in slamming the company’s demands.
Woodside had requested that Finance Minister Yair Lapid recognize return on capital of between 17% and 19% for floating liquefied natural gas (F-LNG) production, yet this clause was not included in an outline of the taxation principles, Globes reported.
While Woodside’s attorney would not confirm the exact details of the dispute, the company released a short statement on the matter over the weekend.
“Woodside refers to its announcement dated February 7, 2014 that Woodside and the Leviathan Joint Venturers, Noble Energy Mediterranean Ltd, Delek Drilling LP, Avner Oil Exploration LP and Ratio Oil Exploration (1992) LP had entered into a memorandum of understanding (MOU),” the statement said.
“The parties have not executed the definitive agreements by the target date of March 27, 2014 contemplated in the MOU. Discussions continue with the parties and the Israeli Government with a view to resolving the remaining issues and executing definitive agreements.”
With ample hydrocarbon supplies for decades of domestic use and export, Leviathan – located about 130 km. west of Haifa – is estimated to contain about 535 billion cubic meters (18.9 trillion cubic feet) of natural gas and 34.1 million barrels of liquid condensate.
As of now, Noble Energy holds 39.66% of the Leviathan field, Delek Group subsidiaries Delek Drilling and Avner Oil Exploration each hold 22.67% and Ratio Oil Exploration owns 15%. If the agreement does eventually go through, Woodside will hold 25%, Noble Energy will own 30%, Delek Drilling and Avner will each own 16.93% and Ratio will hold 11.12%.
In an appeal to the Tax Authority on Sunday, Gal-On requested that the government body refrain from “providing exceptional tax benefits to the Leviathan gas partners.”
“Once again the huge corporations – local and international – are requesting outrageous tax benefits that will come at the expense of us all,” Gal-On wrote. “I am aware of the great pressures exerted upon the Tax Authority at this time, and I therefore turn to you in request that you stand firm and refuse to approve exceptional tax benefits for the Leviathan reservoir partners.”
On Saturday, Yacimovich slammed Woodside and its CEO Peter Coleman, describing their actions as “audacious and piggish.” Yacimovich has been consistently active over the past year regarding the determination of natural gas export quantities, arguing that the division of the country’s natural resources must occur with complete transparency in the Knesset.