Russian energy giant Gazprom has abandoned plans to participate in the project on developing the Leviathan gas field located in the Mediterranean Sea off the coast of Israel, Russian newspaper Vedomosti reported referring to the company`s spokesperson.
The spokesperson also said that the Russian company had withdrawn from other development projects in Israel, without specifying the reasons.
As reported earlier, Gazprom has been negotiating with the Leviathan consortium – Delek Drilling, Avner Oil & Gas, Ratio and Noble Energy, the purchase of a 30% stake in the gas field. At the same time, other companies like Total, ExxonMobil, ConocoPhillips and Chevron were interested in the project but Gazprom said it was willing to pay a higher price, according to Israel`s financial newspaper Globes.
Head of LNG at ICIS Heren Roman Kazmin says the decision of the Russian company seems logical, as the government of Israel is able, in accordance with applicable laws, to reroute gas contracted for foreign buyers for the domestic needs if necessary. At this, the expert notes the price regulation remains within the competence of the state. He added this had also become the reason for the refusal to participate in a project of Australia`s Woodside Petroleum Ltd in 2014.
There are also political reasons, the expert notes. Gazprom is considering Bahrain and Kuwait as priority markets. However, there is zero likelihood that gas produced from the Israeli gas field will be shipped to Kuwait, Kazmin added. He assumes Gazprom may be interested in participating in more promising projects in the region, including in Iran, which has recently seen the lifting of sanctions.
The analyst at Sberbank CIB, Valery Nesterov, admits the Leviathan project is cost-consuming and politically risky. From the U.S. and the EU perspective, Israel`s gas fields seem to represent a possible alternative to Russian gas, the analyst said. He does not rule out that Gazprom may have decided to boost gas supplies to Europe by means of own resources.
The Leviathan gas field was discovered in 2010, and it is believed to have a reserve of more than 620 billion cubic meters of gas.
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