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Leviathan partners said in talks to secure up to US$4b

Tuesday, March 22, 2016 - 07:04

[TEL AVIV] The partners in Israel's Leviathan natural gas find are seeking to raise as much as US$4 billion to develop the offshore field and are in talks with banks on funding plans, two people with knowledge of the matter said.

Noble Energy Inc of the US and Israel's Delek Group Ltd and Ratio Oil Exploration 1992 are seeking to raise between US$3.5 billion and US$4 billion, the people said, asking not to be identified as the talks are private.

The partners will secure their slices of the funds in proportion to their ownership of the Leviathan field, the people said. Delek owns 45 per cent through its units, Delek Drilling LP and Avner Oil Exploration LLP, while Noble owns 40 per cent. Ratio holds a 15 per cent stake.

They're negotiating with lenders including Deutsche Bank AG, Citigroup Inc, HSBC Holdings Plc, BNP Paribas SA, JPMorgan Chase & Co and Natixis SA to cover about 65 per cent of the development costs, the people said. The remainder could come from bond sales or equity, according to the people.

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Gas discoveries off Israel's Mediterranean coast include the Tamar field and Leviathan, the country's largest deposit, which have brought the nation closer to energy independence and to becoming an energy exporter. Tamar holds about 10.8 trillion cubic feet of gas and Leviathan about twice that amount.

The partners are also negotiating to export about 10 billion cubic meter a year of natural gas to Turkey, which would be worth about US$2 billion a year, according to the people.

In November they agreed to enter non-binding negotiations with Dolphinus Holdings Ltd in Egypt to supply as much as 4 billion cubic meters of natural gas annually for a period of between 10 and 15 years. Dolphinus is a group of large, non-governmental gas consumers and distributors headed by Egyptian businessman Alaa Arafa. In addition, Israel expects a gas pipeline to Jordan to begin in 2017.

Delek Group rose as much as 2.9 per cent before gaining one per cent to 655.80 shekels at the close of trading in Tel Aviv. Delek Drilling added 1.4 per cent and Avner advanced 1.2 per cent. The TA-Oil & Gas Index strengthened 1.2 per cent to 918.7, the highest level since Jan 11.

Delek, Noble, Ratio, Deutsche Bank, HSBC and Citi declined to comment. Natixis, BNP Paribas and JPMorgan didn't immediately respond to requests for comment.

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