Woodside is losing patience on Leviathan
Every month that passes increases Woodside's fears that the Leviathan deal was a mistake that will cost it better business opportunities elsewhere in the world.
In the past two years, Mozambique has become the hottest place in the market, and Lebanon could become the next hot place in a year. All the energy majors, are rushing there.
But the Israeli government has time. It is behaving as if it is alone in the world. Every month that passes increases Woodside's fears that the Leviathan deal was a mistake that will cost it better business opportunities elsewhere in the world. Coleman is the man who signed the deal.
On December 6, 2012, Woodside signed a letter of intent to acquire 30% of the rights to Leviathan for $1.25 billion in cash from its current owners Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L). Shortly before the signing, Coleman came to Israel and met Prime Minister Benjamin Netanyahu. Coleman wanted to know whether the Tzemach report, which recommends natural gas exports, would be approved. According to a non-Australian source, Netanyahu told Coleman that the report would be approved within three months.
Coleman decided to sign the letter of intent for Leviathan. The closing was scheduled for February. February has passed, and so has March, and April is almost gone, and government approval of the Tzemach report is nowhere in sight. With some delay, the Australians are beginning to realize that nothing in Israel is obvious. Keeping an official government report and oral promises by the prime minister depend on changing political circumstances and the ego of the new minister who wants to make his mark. Israeli politicians know how to talk about the importance of foreign investment, but they almost always act on the basis of personal interest.
The complacency that characterized Woodside and Coleman until now is over. Their confidence is beginning to crack. The big change occurred when Nobel Energy CEO Charles Davidson visited Israel last week. The Australians apparently heard from the Americans that something had made them anxious. Davidson apparently heard from new Minister Energy and Water Resources Silvan Shalom what Shalom told the Energy Conference yesterday: "The Tzemach Report is not sacred. It's possible to change anything, except the Bible."
Shalom's remarks are liable to raise hard questions at Woodside's board of directors. "Who is this Silvan Shalom?" the directors are liable to ask. "Why in hell are we wasting our time in Israel? To get lectures on the Bible?"
Published by Globes [online], Israel business news - www.globes-online.com - on April 23, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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