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

|By:, SA News Editor

A tax dispute between Israel and Australia's Woodside Petroleum (WOPEF, 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 (NBL), Delek Drilling (DKDRF), Avner (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.