Woodside to bid on ‘monster’ Israeli gas field

Oil and gas company, Woodside Petroleum (ASX: WPL) has confirmed that is bidding on the oil and gas rights to an enormous undersea gas field off Israel’s coast.

The field, known as Leviathan (a name usually associated with a large sea monster), holds around 17 trillion cubic feet of gas, making it one of the world’s largest deep-water gas finds in years. According to Israeli business news service Globes, Woodside is bidding for 30% of the rights to the Leviathan licences. While the company has declined to talk about prices, it has confirmed that it is participating in the bidding process.

Australia’s largest pure oil and gas company has been looking for new international expansion opportunities, recently signing a deal to join South Korea’s Daewoo International in an exploration venture off the coast of Myanmar. Woodside has joined with partners keen on an exploration licence offshore Cyprus according to The Australian Financial Review.

You would think that Woodside has enough on its plate already, with its Pluto LNG plant stuck in first gear, after the company was  unable to find enough gas to support an expansion.

Woodside also has plans to develop two additional – and controversial – LNG plants, namely Browse and Sunrise. Browse is facing opposition from greenies worried about an LNG processing facility damaging the environment at James Price Point in Western Australia. Its partners in Browse, including BHP Billiton (ASX: BHP), Shell, MIMI and BP, apparently want gas piped to another processing plant, rather than building the plant at James Price Point.

Sunrise has its own issues, located halfway between East Timor and Australia. East Timor wants an LNG processing plant built in East Timor, with gas piped to it from the Sunrise gas field, while Woodside has said it prefers a floating processing plant.

The Foolish bottom line

Many resources companies are struggling with the high cost of developing resource projects in and offshore Australia. Santos Limited (ASX: STO) and Origin Energy Limited (ASX: ORG) are involved in building LNG processing plants in Gladstone, Queensland and have suffered cost increases to their projects already.

Expansion into new gas fields and the opportunity to build cheaper LNG plants overseas may be a good move for Woodside and its shareholders.

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Motley Fool writer/analyst Mike King owns shares in Woodside and BHP. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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