Woodside Petroleum maintains focus on Israel

Despite a wave of speculation that Woodside Petroleum’s (ASX: WPL) investment in Israel’s Leviathan gas field is at risk of falling through, company CEO and Managing Director Peter Coleman has reiterated the company’s focus on seeing a deal done.

Presenting at the UBS Superannuation conference in Melbourne yesterday Mr. Coleman labelled the deal a “once-in-a-decade opportunity” and gave no indication the deal would not proceed. The comments appeared to be welcomed by investors with Woodside’s share price which jumping 1.8% compared to the increase in the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO), which was up just 0.19%.

The Israel gas deal offers Woodside access to one of the largest recent natural gas discoveries in the world and which is “ideally located” for efficient shipping transport to Asia and piping to Europe.

The contentious issue for the project to date has been around the volume of gas made available for export, but Mr Coleman said the levels are still within the volume on which Woodside based its investment decision. Once final sign off is completed by Israel’s government ,Woodside will be able to finalise the agreement with joint venture partners and get the ball rolling.

However it has been noted by Business Spectator that Woodside may be required to stump up more cash than initially anticipated as the result of changes proposed by joint venture partner Noble which is considering an offshore pipeline to export gas to Turkey.

Woodside is actively pursuing a strategy targeting international expansion in the face of increasing global competition. This includes the growing threat of LNG exports coming from North America and future production potential from East Africa and Russia.

International expansion will also shift future growth to outside Australia which Mr. Coleman said is becoming increasingly challenged by cost structures. This is a reason LNG producers including Santos (ASX: STO) and Oil Search (ASX: OSH) are taking to investing offshore like the soon to be completed PNG LNG project.

Foolish takeaway

Woodside’s international strategy will build diversity into the company’s portfolio, spreading it across different countries and different project time frames and sizes. This lessons the risk of pilling on excessive debt which is an attractive prospect for investors.

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Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned in this article.

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