Australia's Woodside Petroleum Ltd. (ASX: WPL) and the Israel Tax Authority are expected to sign an agreement after Passover on the tax that the company will pay for acquiring 25% of the rights in the Leviathan natural gas field for $2.71 billion. Sources inform ''Globes'' that the parties established a rapport in the negotiations after Woodside executives met Tax Authority officials, headed by director general Moshe Asher, this week. Following the meeting, the Woodside VP handling the talks returned to Australia.

However, energy market sources believe that even if a deal with the Tax Authority is reached, there is no assurance that the owners of the rights in Leviathan will agree to sell rights to Woodside on the terms set out in the memorandum of understanding (MOU) signed in February in Australia. According to the sources, since the deadline set in the MOU has passed, the rights owners - Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) - are released from their commitments and want to amend the terms.

Two weeks ago, Woodside, run by CEO Peter Coleman, walked out at the last moment on the signing ceremony for the final farm-out agreement to the rights in Leviathan. The reason for the company's decision not to sign the agreement was that a number of issues had not been clarified, among them a major dispute with the Tax Authority over accelerated amortization.

The gap between the parties at the time was too wide to be bridged: Woodside wanted to amortize its investment in Leviathan over ten years, while the Tax Authority demanded a 25-year period (its original position was 30 years). Attempts to reach agreement between Woodside and the Tax Authority resumed a few days later, with the encouragement of Prime Minister's Office director general Harel Locker.

Published by Globes [online], Israel business news - www.globes-online.com - on April 8, 2014

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