April 20, 2012 / 2:06 PM / 7 years ago

Partners in Israel Leviathan field to sell stakes

* Noble, Delek need cash to develop huge East Med. gas projects

* GDF Suez, Gas Natural and Gazprom interested in assets

By Henning Gloystein and Charlie Zhu

LONDON/HONG KONG, April 20 (Reuters) - Partners in the huge Leviathan natural gas field offshore Israel aim to sell stakes in the field to bring in other stakeholders and raise cash to help develop the project, sources close to the matter said on Friday.

The consortium, led by Houston-based Noble Energy and Israel’s Delek Group, have hired Citigroup to bring in one or more new partners, the sources said.

The Leviathan gas field is located 130 km (80 miles) off the Mediterranean port of Haifa and has estimated gas reserves of 17 trillion cubic feet (tcf), enough to cover Israel’s gas needs for generations and make it into an exporter of liquefied natural gas (LNG).

“The partnership is seeking to bring in a partner who has LNG development and marketing skills,” said one source, adding that members of the consortium would sell down their stakes to the new partner in order to raise cash for the field’s development as well as further exploration in the eastern Mediterranean.

Another source close to the matter said that likely partners could include European utilities with upstream gas interests or Russia’s Gazprom.

“We know that Gazprom have been talking about asset stakes, and also Spain’s Gas Natural, but GDF Suez is also interested,” the source said, adding that the French company would be the most economically sound option.

“GDF Suez has sufficient LNG experience, big marketing and client potential, as well as assets in neighbouring Egypt, which already has a pipeline connection with Israel,” although the Egypt-Israel gas pipeline is not currently a major factor in the decision-making, because it has been blown up several times in the past year, the source said.

Russia’s Gazprom has so far relied largely on piping its gas to Europe but now wants to expand its LNG business in Asia. Israel’s gas fields, situated close to the Suez Canal, would be well suited for this, the sources said.

They said that Asian utilities are also interested in new LNG assets but that a deal with Israel would be politically sensitive with existing clients in the Middle East and Southeast Asia.

The sources requested anonymity because they are not authorised to speak to media on specific deals.

Citigroup and officials of the consortium were not immediately available for comment.

Noble owns 39.66 percent of Leviathan, while Delek Energy subsidiaries Avner Oil and Delek Drilling each own 22.67 percent. Ratio Oil owns the remaining 15 percent.


The Leviathan gas field is not the only big recent finding in the eastern Mediterranean.

Some analysts say that total offshore gas reserves in the region could exceed 100 tcf, prompting interest in exploration on the part of other countries including Egypt and Turkey.

Leviathan’s consortium also is carrying out exploration and development of Israel’s 8.5 tcf Tamar gas field, in which Gazprom has declared an interest.

Noble has also identified around 7 tcf in the Aphrodite gas field, which is in Cypriot waters, although some part of it could also be within Israel’s domain.

Cooperation between Israel and Cyprus works well, with the two governments having joint exploration agreements in place.

But experts say that developing Israel’s and Cyprus’ gas fields will be complicated because of deeper regional conflicts.

The Lebanese government has said that some of Leviathan’s gas may be in its waters, a claim Israel rejects, and the Turkish government has said that any Cypriot gas revenues would have to be shared with Turkish-speaking northern Cyprus.

Lebanon has no diplomatic relations with Israel. Turkey does not recognise the Republic of Cyprus, which along with the European Union does not recognise northern Cyprus. (Additional reporting by Tova Cohen and Ari Rabinovitch in Tel Aviv; Denny Thomas in Hong Kong; Tom Bergin and Sophie Sassard in London, editing by Jane Baird)

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