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Israel’s Delek looks to increase stake in Cyprus gas field (Update 2)

By Elias Hazou

Israeli conglomerate Delek Group are in talks to buy an additional 19.9 per cent stake of the Aphrodite offshore gas field from their partner, Texas-based Noble Energy, for about $155 million (€141 million).

In a statement to the Tel Aviv Stock Exchange on Monday, Delek said the negotiations with Noble are at an early stage and any deal would need various regulatory approvals.

Noble have a 70 per cent stake in the field, which is located in Block 12 and estimated to contain 4.54 trillion cubic feet of natural gas. Delek, through two subsidiaries, hold the remaining 30 percent.

Noble released this brief statement:

“We do not discuss ongoing commercial negotiations, as a matter of business practice. However, we can confirm that we are in preliminary and nonbinding discussions with Delek and other parties about acquiring working interest in our Block 12 license holdings.

“Those discussions are continuing, and we have not finalized any agreement with any party, including Delek.”

Commenting on the issue on Tuesday, energy minister Giorgos Lakkotrypis called it a positive development.

It indicated interest in investment in the project, at a time when fuel and gas prices were now starting to fall, he added.

Delek’s move may be prompted by complications in Israel, where they will have to gradually exit the Tamar reservoir as well as sell their holdings in two smaller offshore reservoirs. Israeli authorities have accused Delek and Noble of constituting a cartel.

In its 2014 annual report, Noble spoke of the potential for a farm-out arrangement of their working interest in Cyprus’ Block 12.

It’s understood the company tends to keep around 40 per cent of its working interest in its various concessions, thus spreading the risk – standard practice in the industry.

In the same report, Noble said they were evaluating development scenarios for Block 12 and planned to submit a plan of development to the government this year.

In March of this year, Lakkotrypis told an energy conference in Nicosia that the Americans were poised to declare the Aphrodite field commercially viable “within the next few weeks.”

And in April, Delek announced that in the second half of the year the Aphrodite partners planned to submit to the government a notice declaring the reservoir ‘commercial’ along with a development plan.

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