Noble Energy agreed to sell of its stake in two undeveloped gas fields in the Eastern Mediterranean to satisfy concerns that the Houston oil company held too much control over Israel’s natural gas resources.
Noble sold its 47 percent interest in the Karish and Tanin fields for $67 million to its Israeli partner, Delek Group.
Under the deal, Delek will have exclusive control to sell the full rights to a separate buyer within 14 months as part of an arrangement with the government to open the country’s reserves to additional developers, according to Israeli news reports.
Italian oil company Edison S.p.A. along with U.S. exploration and production companies, Hess Corp. and EOG Resources, have been identified as potential buyers, Israeli newspaper Globes reported Sunday.
Israel’s energy minister Yuval Steinitz has also suggested that Eni consider investing in the Karish and Tanin fields following a massive discovery by the Italian oil company offshore Egypt earlier this year, Globes reported.
The two fields contain about 3 trillion cubic feet of gas, Reuters reported.
Noble’s deal with Delek won’t be finalized until the framework agreement wins full governmental approval, which could happen in the coming weeks. The deal has been controversial in Israel, where some worry that the government has ceded too much control over its newly discovered natural gas bounty to Noble and Delek.
More than 10,000 people gathered in Tel Aviv to protest the arrangement and to call on the government to scrap the deal, according to reports in the Times of Israel.
The divestiture of the Karish and Tanin fields is a big step for Noble as it works to remove all regulatory hurdles in its plans to fully develop two larger gas fields offshore Israel, the Tamar and the Leviathan. Selling off its stake provides the company with additional cash at a time when anemic oil prices have pinched its finances, spurring the company to lay off workers and curtail some of its drilling plans in the United States.
“Ultimately, this is another positive step for (Noble) towards generating incremental cash to support their plan to live within cash flow in 2016, as well as pursuing the full development of the Tamar and Leviathan fields,” investment banking firm Simmons & Co. wrote in a note to investors Monday.