Woodside snaps up Leviathan stake Woodside Petroleum has moved to diversify away from Australia with a US$1.25bn deal to take a stake in the giant Leviathan field, the biggest deepwater gas reservoir discovered in the past decade. Woodside on Monday said it will pay an initial US$700m for a 30 per cent stake in the field, which lies 135km off the coast of Israel and is estimated to contain 17tn cubic feet of recoverable gas. The eastern Mediterranean has become a hotspot of the global oil industry following the discovery of Leviathan and the neighbouring Tamar field, as well as the Aphrodite find in Cyprus. The US Geological Survey estimates the subsea area that runs from Egypt north to Turkey - known as the Levantine Basin - contains more than 120tn cubic feet of natural gas and 1.7bn barrels of oil. The Leviathan and Tamar discoveries are poised to transform the Israeli economy. They are expected to cover domestic gas demand for at least a quarter of a century as well as produce billions of cubic feet for sale abroad. Government revenue from the fields is forecast to reach US$140bn over the next three decades. Noble Energy, the Texas-based operator of Leviathan, has been searching for an experienced liquefied natural gas partner to help develop the field, which lies beneath 1,700m of water. But many big oil groups in Europe and the US have shied away from investing because of their relationships with oil-rich Arab countries. Noble is targeting the start of production for the domestic gas market in 2016. Adrian Wood, analyst at Macquarie Securities in Sydney, said Woodside paid a "reasonable" price for the 30 per cent stake given the risks surrounding the commercialisation of the find, including the lack of an LNG export license and uncertainty over domestic gas requirements. "Many unknowns stand between Woodside and potential LNG revenue . . . indeed, the structure of the deal suggests management recognises these risks," he said. Woodside chief executive Peter Coleman has been looking to broaden the company's portfolio of assets away from its focus on Australia, where large resources projects have been plagued by cost overruns. Woodside, Australia's biggest oil and gas company by equity market value, was one of 15 companies that bid on nine offshore gas blocks in Cyprus earlier this year. In October it announced plans to explore for oil and gas in Myanmar with South Korea's Daewoo International. Mr Coleman said: "We have a proven track record of safe and reliable operations in Australia and being selected as Leviathan's preferred partner in a competitive bidding process demonstrates the value of our LNG development capabilities." The Perth-based company has two multibillion-dollar projects off the coast of Western Australia - North West Shelf and Pluto, which started production earlier this year. It is due to make a decision on a third, the A$40bn (US$42bn) Browse project, next year. Under the terms of Monday's deal Woodside will make an initial upfront payment of US$700m followed by a payment of US$200m once laws permitting the export of LNG are in force. A further US$350m is due once the partners approve a final investment decision. Woodside will be the operator of any LNG development at Leviathan, and has also secured the rights to participate in further exploration of the fields.