Woodside Petroleum announced on Monday that it is committed to buy a 30 per cent stake in the Leviathan offshore gas field for $1.3 billion. It would be Australia's largest foreign direct investment into Israel.

While the gas field is run by Noble Energy, a U.S. company, the Woodside deal would result in the operation of a liquefied natural gas (LNG) plant to be built as the field is developed, although it is also open to a floating plant.

Leviathan was discovered in 2010 and estimates to hold 17 trillion cubic feet of gas. It is within the exclusive economic zone of Israel and twice the size of the nearby Tamar field discovered in 2009.

Lebanon had previously disputed ownership of the field with Israel in December 2010 with a threat from the Hezbollah that it would not allow Israel to plunder Lebanon's maritime assets.

Woodside Chief Executive Peter Coleman said that despite the security risks made by Lebanon's threat, the Australian gas firm has made its own assessment of the security risk, spoken to Israeli security forces and reviewed potential sites for onshore facilities. He said that Woodside believes the risks are manageable.

He said Israel was motivated to provide assurance that Woodside would be provided stability and fiscal and investment terms for the company to become a long-term investor.

The investment into Israel is part of Woodside's strategy, outlined in the following YouTube video, to have a broader portfolio.

"We have always said we wanted to fill the portfolio with world-class opportunities and the best ones will go first. Our funding capacity is in place, we believe we can fund this. And we also believe it will get supported well within the investment market," The Australian Financial Review quoted Mr Coleman.

Besides Leviathan, Woodside is pursuing two more major gas projects, Browse and Sunrise. It is part of the company's diversification strategy in geographic location, market risks and opportunities that led to Woodside selling in May 2012 its 14.7 per cent stake in the Browse LNG development for $2 billion. Woodside, however, has retained a 31.3 per cent stake in Browse.

The new strategy put in place by Mr Coleman in contrast to that taken by his predecessor, Don Voelle, who sold Woodside investments in Mauritania, Libya and Kenya due to higher political risks in these nations.

News of the Leviathan investment caused Woodside shares to go up 0.9 per cent to $34.11 at the close of trading hours.

RELATED STORIES