Russia reportedly shows renewed interest in Israeli natural gas - Hezi Sternlicht

by Hezi Sternlicht

A serious player from Russia's energy sector is believed to be considering joining the development of the Leviathan natural gas field • Russia is an important gas provider to Europe, and the move could have broad geopolitical implications.

Israel's offshore Leviathan gas field | Photo credit: Albatross

Is Russian President Vladimir Putin showing renewed interest in Israel's natural gas reserves? Sources familiar with the issues said Sunday that another round of negotiations over the development of the Leviathan offshore gas field by a serious player from Russia's energy sector could be in the works.

The degree of Russian interest is still unclear, but the potential renewed interest comes on the heels of Prime Minister Benjamin Netanyahu's meeting with Putin in Moscow last Thursday.

Some three years ago, the state-run Russian energy giant Gazprom expressed interest in buying gas harvested from the Tamar reservoir. While a memorandum of understanding was signed on the issue, it never matured into a binding agreement. Gazprom later held talks to purchase a significant 30% share of Leviathan, but those negotiations never resulted in a deal, as Leviathan's controlling shareholders entered negotiations with Australian company Woodside Petroleum, which ultimately fell through as well.

Russian access to Israel's natural gas deposits could have broad geopolitical implications. Russia is an important gas provider to Europe, and as American company Noble Energy partly owns Leviathan, it appears Russian-U.S. relations may also become part of the equation.

Developing the Leviathan gas field is an enormous economic undertaking, expected to cost controlling partners upwards of $5 billion. 

The offshore reservoir's development hit a major snag following the High Court of Justice's decision to repeal the 10-year price stability clause in the gas deal. Negotiations are currently underway to find a legal alternative that would allow Leviathan's development to resume.

Leviathan's owning partners have said development work has continued and will continue, assuming that in the coming months a solution is found and approved by the High Court to meet the final goal of achieving gas flow from the reservoir by 2019.

Hezi Sternlicht

Source: http://www.israelhayom.com/site/newsletter_article.php?id=33323

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