Woodside will be joining the field's partnership, which includes Noble Energy Mediterranean, Delek Energy, Avner Oil Exploration and Ratio Oil Exploration.
Under the terms of the agreement, production is targeted for 2013 and distribution for domestic use is scheduled for 2016.
The Leviathan gas reservoir is one of the biggest of its kind discovered in the past decade, holding an estimated 17 trillion cubic feet (TCB) of recoverable natural gas.
Woodside, which has a $30 billion market cap, is expected to make an initial upfront payment of $696 million, and another $200 million payment once the projects secures a license for a LNG facility. A further $350 million will be paid at a later stage.
Woodside CEO Peter Coleman said that "entering the Leviathan gas reservoir is a growth engine for us. We are happy to be entering the Mediterranean Basin, which is rich in gas. This is an excellent opportunity for us."
Positioning Israel as key player
Once the partnership agreement is signed, the Leviathan partners will file for the fuel authority managing director's approval for the deal with Woodside and for the registration of its rights in the reservoir.
Woodside will oversee the field's midstream operations – development of exports, while Noble Energy will remain responsible for upstream operations – supply of gas for domestic use.
Ratio CEO Yigal Landau said, "There is great importance in bringing in a strategic partner, and Woodside responds to that requirement. This is a company with an outstanding reputation, which will position Israel as a key player on the global liquefied natural gas market."
This report was originally published in Hebrew by Calcalist