Israel investment risks manageable, WPL

Woodside Petroleum has played down security risks involved in operating a gas processing plant in Israel as it continues to push into overseas markets.

The energy giant on Monday announced it had struck a $US696 million ($A670.04 million) deal on a major gas prospect off the coast of Israel, just days after a ceasefire was agreed with Palestine.

Woodside has agreed to commercial terms for the acquisition of two exploration licences in the Leviathan gas field in the Mediterranean Sea.

Chief executive Peter Coleman said a delegation of company executives had visited Israel twice in relation to the deal and spoken with Israeli security forces.

"We've viewed the potential sites for onshore facilities and made our own risk assessment around that," he told analysts on Monday.

"We feel that's manageable. We also feel that the investment market will see that the risk is quite manageable."

The company will be the operator of any liquefied natural gas (LNG) development of the Leviathan field, a major deepwater gas prospect discovered in 2010.

The deal with the US-based firm Noble Energy gives Woodside a 30 per cent interest in Leviathan.

Earlier this month, the company struck an agreement with Daewoo International Corporation for a production sharing contract in Burma.

Mr Coleman said the company saw the Israel deal as complementary to its investment in the Browse project in north Western Australia and Sunrise in East Timor.

"Between now and the middle of 2013 we're in an excellent position to understand what our capital requirements are going to be," he said.

He added that there were no impediments to accessing labour in Israel.

As part of the arrangement Woodside will pay a further $US200 million ($A192.54 million) once laws permitting LNG exports from Israel are in place, and another $US350 million ($A336.94 million) once a final investment decision is made on an LNG development.

Mr Coleman said Woodside's balance sheet strength and its track record of execution would help in the financing of the project.

"We've been conservative with respect to expectations around development costs," he said.

Macquarie analyst Adrian Wood said the Leviathan was another long-dated growth option for Woodside.

But it would probably come at the expense of crimping near-term yield expectations following increased cash flow from Pluto.

"Who knows ultimately what it's going to be worth because there's so many uncertainties sitting between this deal and any future LNG revenues," Mr Wood said.

Still, Woodside had not paid much to enter the Leviathan project and the company was unlikely to do another deal in Australia.

"I don't think this deal precludes or advances the Browse project," he said.

Woodside's shares closed 31 cents, or 0.92 per cent, higher at $34.11.

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