NEW YORK (The Deal) -- Australia's Woodside Petroleum has abandoned plans to pay as much as $2.55 billion for a 25% stake in Israel's Leviathan field, claiming that negotiations with sellers led by Houston-based Noble Energy (NBL - Get Report) failed to reach a "commercially acceptable outcome."
The decision comes 18 months after Woodside first announced plans to buy into the Mediterranean field and just under four months after it signed a memorandum of understanding to become both the field's No. 2 shareholder behind Noble, and the operator of an associated LNG plant.
"All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal," Woodside CEO Peter Coleman said in a statement.
Woodside's negotiations with the field's shareholders had been marked by a series of delays, notably related to the existing partners' recent prioritization of sales to nearby markets over seaborne exports to Asia that required a LNG facility.
Must Read: Moody's Sees Thorny AT&T Deal with DIRECTV
"The plans for development of the Leviathan discovery have significantly changed since we began the search for a partner approximately two years ago," Noble Energy Chairman and CEO Charles Davidson said in a statement. "The emergence of...regional markets, which are accessible through pipeline outlet, has pushed the need for LNG into a later phase of development."
Woodside also found itself at loggerheads with the Israeli government over the tax treatment of a $1.2 billion initial investment in the field and of the tariffs that would be applied to exports from the project.