Exxon working with Israel to develop floating LNG export facility
TEL AVIV (Bloomberg) -- Exxon Mobil is in discussions to build a platform that would expand the export reach of Israel鈥檚 biggest natural gas field.
The world鈥檚 largest publicly-traded oil and gas company is in talks with Israeli authorities about developing the country鈥檚 Leviathan reservoir by building floating liquefied natural gas ship. Such a project would allow the Leviathan partners to export to countries not reachable with pipelines and avoid the need to build expensive infrastructure to connect to LNG facilities in Egypt. It鈥檚 possible the discussions ultimately won鈥檛 lead to a partnership, the people cautioned.
An Exxon representative said the company was still evaluating its options.
鈥淚t鈥檚 too early to comment on specific development and production timelines,鈥 the representative said.
Despite considerable gas discoveries in the Eastern Mediterranean region over the past decade, viable export routes have proven tough to find and global energy firms haven鈥檛 rushed in. The Leviathan partners have signed deals to meet surging demand in Egypt, Jordan and Israel, but haven鈥檛 yet found a way to export to Europe or East Asia.
The partners developing Leviathan, a deep-sea find of about 600 billion cubic meters -- at the time it was found, the biggest underwater gas discovery in a decade -- have bookmarked the next phase of the reservoir鈥檚 development for export deals and are examining ways to reach markets outside the region. Delek Drilling, the biggest shareholder in the Leviathan field, is looking into several options, such as buying a stake in one of Egypt鈥檚 LNG sites.
The talks with Exxon are the latest sign that an unofficial energy boycott on Israel, imposed by leading Arab countries, is fading. Energy majors that partner with big Arab firms have hesitated to do business with Israel in the past, for fear of risking ties with states that control some of the world鈥檚 biggest energy reserves and have been hostile toward Israel until now.
Those concerns seem to be dissipating. Israel and Persian Gulf states have found common cause against Iran, leading some Arab leaders, such as Saudi Crown Prince Mohammed Bin Salman, to break longstanding diplomatic taboos on Israel. Covert trade with the Arab world, mainly involving Israel鈥檚 technology sector, also has grown.
For Exxon, expanding into Israel would reflect the company鈥檚 growing ambitions in the East Med, an area that straddles Egyptian, Israeli, Lebanese and Cypriot waters. Exxon established a foothold in the region in February, when it found an offshore reservoir in Cypriot waters that鈥檚 about one-third the size of Leviathan.
Exxon recently spoke with Israeli Energy Minister Yuval Steinitz about participating in an upcoming tender for new offshore drilling blocs, according to people familiar with the matter.