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Israel risks delay in becoming big gas exporter due to tax dispute

Apr. 03, 2014 12:55 PM ETWoodside Energy Group Ltd (WDS) StockCVX, AVOGF, WDS, DKDRFBy: Carl Surran, SA News Editor2 Comments
  • A tax dispute between Israel and Australia's Woodside Petroleum (OTCPK:WOPEF, OTCPK:WOPEY) threatens to delay gas production from the giant Leviathan field, while the government is also forcing oil firms to spend more on pipelines than they expected.
  • In the tax dispute, the government wants to depreciate Woodside's initial $1.2B investment over the 30-year lifespan of the Leviathan field, while the company argues for a shorter 10-year term, and a shorter depreciation period shields more of Woodside's investment from tax.
  • At the same time that tax issues delay the entry of a critical partner, the government secured pledges from the four Leviathan stakeholders - Noble Energy (NYSE:NBL), Delek Drilling (OTC:DKDRF), Avner (OTCPK:AVOGF) and Ratio Oil for the construction of 12B cm of pipeline capacity from Leviathan to Israel.
  • The squeeze could push the project $1B or more over budget, a source tells Reuters.

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