Ann: Speculation Regarding Israeli Petroleum Lice, page-13

re: Ann: Speculation Regarding Israeli Petrol... I don't really agree with that Eureka report. I think it misses a few critical issues.

First, exactly which neighbours are going to attack Israel's gas hub? Egypt and Turkey are at least nominally friendly to Israel these days, and Lebanon has no military capacity. The Syrians have enough to worry about internally, and wouldn't dare because the Israelis would flatten them in retaliation.

Only the Iranians are conceivably a threat and that is only by proxy - terrorist attacks by Hezbollah with Iranian help that could damage a facility but not destroy it.

Second, as BB pointed out, the risk profile for Leviathan pales in comparison to the risk profile for Browse and Sunrise. Different risks (security vs technical and political) but a risk is a risk.

Third, the article says:

It is no longer the near-annuity they saw, reaping cash off domestic oil and gas production and paying handsome dividends

Handsome dividends? The yield only looks faintly attractive now because the SP has been smashed. Before the SP drop it was trading north of $40 with a div yield of less than 3%, barely keeping with inflation.

On the contrary, WPL was trading on its forward earnings potential from Pluto, Browse and Sunrise. In other words it was "a company chasing growth... in a way which significantly raises risk."

So how is that different from now? They are just looking to replace the high risk Browse and Sunrise with a project that carries an elevated geopolitical risk but significantly lower financial, technical, regulatory, political and market access risks.

I also agree with szaba that a pipeline to Israel and to the European network is likely to happen. The question is whether they go for LNG exports as well due to the massive size of the field. I actually suspect the Israelis will be keen to stick with the pipeline option to secure the gas supplies themselves long-term instead of selling the proverbial farm like the Australian government likes to do.