Australians May Join Cyprus LNG Project


An Australian firm seeking to join in the development of Israel’s offshore natural gas reservoirs, is now thinking out loud about joining a liquefied natural gas (LNG) consortium in Cyprus instead.

Australia’s Woodside Petroleum, which had planned to acquire 30% of the rights to Israel’s Leviathan gas field and to build an LNG plant for export of gas to the Far East, is reconsidering. Woodside might follow Leviathan partners Delek Group and Noble Energy to Cyprus, with whom they signed a memorandum of understanding on Thursday to build an LNG plant there, Globes reported, quoting The West Australian.

Woodside would bring the indispensable technical know-how to the project, which none of the consortium’s current members have. The company is a global leader in building LNG plants, the cost of which starts at $6 billion, and can reach tens of billions of dollars.

Woodside offered to pay Leviathan’s partners — Delek, Noble Energy, and Ratio Oil Exploration — $1.5 billion for the stake.

However, Woodside apparently is wary of local obstacles, not the least of which is the petition to the High Court initiated by Labor Party chairwoman MK Shelly Yachimovich and MK Reuven Rivlin (Likud) to halt gas exports until the Knesset decides the issue. The threat of terrorists targeting a gas facility also inevitably figures in the discussions.

The change of heart at Woodside could mean that Cyprus will edge out Israel in the race to build an LNG plant. Experts say that if an LNG plant is built in Cyprus, another one in the southeastern Mediterranean basin would become superfluous. There are already enough natural gas discoveries in Cyprus to justify the construction of a basic LNG plant (one train) at a cost of $6-8 billion, and there are strong chances of further offshore discoveries in the coming years.