Noble Energy Leviathan Project Faces Longer Delays After Israeli Court Ruling
Noble Energy says it will “vigorously defend” its rights to the Leviathan project after the Israeli Supreme Court struck down part of a legal pact that guaranteed the government wouldn’t make major changes to the way it regulates the Mediterranean Sea development for a decade.
The ruling could put off Noble’s $6 billion natural gas project off the coast of Israel for as much as a year, the time the court has given the Israeli government to revise that portion of the legal framework it proposed last year. The project was expected to start up in 2019.
It also comes a few weeks after the Houston oil company said the long-awaited project is on a faster track and that it could make a final investment decision on the project in the second half of the year. Noble shares dropped 7.4 percent in early trading Monday.
The setback is “disappointing and represents another risk to Leviathan timing,” Noble CEO David Stover said in a written statement.
“Development of a project of this magnitude, where large investments are to be made over multiple years, requires Israel to provide a stable investment climate,” Stover said. “Noble Energy has consistently maintained that stability is a minimum condition for project development, and our position has not changed.”
Stover didn’t say exactly how the company would defend its rights to the Leviathan, but said the government must quickly “deliver a solution which at least meets the terms of the framework.”
Israeli antitrust officials and other critics have argued the government’s accord with Noble and Israel’s Delek Group gives the companies a monopoly over the country’s natural gas resources, and it continues “to face stiff opposition in Israel,” said Robert Morris, an analyst at Citigroup.
“We believe that a deal providing long-term stability for the development of Leviathan still faces many hurdles and potential further delays beyond next year,” Morris said.
Noble shares fell $2.36 in early trading Monday to $29.99 on the New York Stock Exchange.