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Opinion Ebb & Flow Ebb & Flow Ebb & Flow

Professor Michael J Economides

Sale of the century

Last month, Noble Energy, the Australia, is poised to overtake aversion to invest in Israel is a

Houston company that has played Qatar as the world’s leading LNG situation that has lasted since the

L a vital role in con? rming massive exporter. creation of the state in 1948.

deepwater natural gas deposits For Woodside, getting gas so There is a second element to the in Israeli and Cypriot waters, cheap in the Mediterranean and Woodside entrance and that is the announced that the partners in the being able to control it in a world shutting out of Gazprom, Russia’s

Leviathan project agreed to sell a market into which it has already massive monopoly. Gazprom has 30% working interest to established a large and ever been circling the area trying to buy

Australia’s Woodside Energy for increasing presence is a no brainer. into Israeli and Cypriot gas in what about US$2.5 billion. It is also clear that the Israeli sellers can be blatantly considered as a Under the terms of the deal, wanted cash, any cash, asap. Trojan horse-kind of relationship.

Noble Energy will sell 9.66% of Woodside in Israeli waters is Gazprom would not want the total rights in the license for of course an important event. Mediterranean gas to be threatening $802 million. The other partners, The company is somewhat of a its hegemony over Europe. There the Delek Group, controlled by maverick, a different breed from the have been constant rumors that

Yitzhak Tshuva, will sell 15% of the traditional conservative Australian Russia would be even willing to rights for $1.281 billion and Ratio company and carrying the imprint throw Iran off the proverbial bus will sell 5% of the rights for had Israel let Gazprom in.

$417 million. These are some nice Israel, on its own, has very

Such a price is chunks of cash and Woodside’s limited options for massive exports probably the reach, so far away from its base of gas. Pipelines through Arab lowest paid last in the remotest city of all, Perth, countries or through Turkey are not is newsworthy on its own merit. politically feasible. LNG is the only year anywhere in

But there are other things to answer and a liquefaction facility in the world.

contemplate. Cyprus is the obvious choice. The prices are ? resale bargains for Where do the recent maneuvers

Woodside. Assuming that Leviathan of its long-time American CEO Don leave Cyprus? Not much has contains 17tcf of recoverable natural Voelte who has just been replaced changed other than the price. gas as reported by Noble, 30% of by long-time ExxonMobil alum However, what is valuable is that (more than 5tcf) has just been Peter Coleman. Voelte, who took the establishment of long-term purchased for $0.50 per thousand over Woodside when the company sales contracts where supply is standard cubic feet. Such a price is was tiny, was often derided by guaranteed. Cyprus is embarking on probably the lowest paid last year some Australians naturally averse a drilling boom and the country’s anywhere in the world for gas in to a foreigner, but his astute petroleum future, properly managed, the ground, including the US which decisions established Woodside in can lead the way in the region.

arguably has had the lowest retail a commanding position in both oil natural gas prices anywhere, less and LNG. is a professor

Michael J Economides than $4/thousand cubic feet. In Woodside had to ? ll a vacuum at the Cullen College of Engineering,

Europe prices hovered around in Israel; major multinational oil University of Houston, and editor- $8 and in Asia topped $15. companies would not enter Israeli in-chief of the Energy Tribune. The

Australia, thanks to a large extent to production for fear of antagonizing views expressed in this column do

Woodside’s work offshore Western their Arab cohorts. Large company not necessarily re? ect OE’s position.

OE | January 2013 oedigital.com 20 oe_Economides.indd 20 03/01/2013 13:22