The local partners in the game-changing discovery of Israel's giant Leviathan natural gas field say they have signed commitment letters with two major banks for up to US$1.75 billion in financing, closing out the year with some good news after a long battle with bureaucracy.
Israel's Delek Drilling and Avner Oil Exploration-the smaller partners in the field alongside US-based Noble Energy-said the commitment letters were from HSBC and J.P. Morgan, and the funds of between US$1.5 billion and US$1.75 billion would be used for the A1 development phase of the field.
Delek and Avner together hold a 45.3-percent interest in Leviathan, while Noble holds nearly 40 percent.
Production at Leviathan is on track to launch in 2019 or 2020, with a significant amount of its production slated for export, including Jordan for certain, and possibly Turkey, Egypt and Cyprus-pipeline deals pending. These exports would be part of the A1 development phase.
"We ... are committed to act in order to pipe gas from Leviathan to the Israeli market and for export already in late 2019. The Leviathan project is taking a significant step forward today," Delek Drilling CEO Yossi Abu said in a statement carried by Reuters.
Related: Shell Considering Dumping Its Iraqi Oil Fields
Noble Energy discovered the Leviathan deposit in 2010, estimating at the time that it held 21.9 trillion cubic feet of natural gas, while the Israeli Energy Ministry puts the estimate at around 17 trillion cubic feet.
Either figure turns Israel not only into a self-sufficient nation in energy terms, but also a major exporter of gas.
The sheer size of the discovery, however, has resulted in a number of bureaucratic roadblocks.
The partnership in this US$6.5-trillion project between Noble and Delek raised doubts about a budding energy monopoly resulting in legal opposition and project delays.
At issue was a prior pledge from the Netanyahu government, which gave the energy companies a guarantee that they would not be hit with any regulatory or pricing changes for ten years. Israel's Supreme Court invalidated that clause in March, calling it unconstitutional.
In May this year, the Israeli government approved a new deal for the Leviathan gas field.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More