Woodside Petroleum has struck a $US696 million ($A670 million) agreement confirming its role in a major gas prospect off the coast of Israel.
The energy giant has agreed to commercial terms for the acquisition of two exploration licences in the Leviathan gas field in the Mediterranean Sea.
The deal with the US-based firm Noble Energy gives Woodside a 30 per cent interest in the Leviathan field, a major deepwater gas prospect discovered in 2010.
Woodside will be the operator of any liquefied natural gas (LNG) development of the Leviathan field, it said on Monday.
"Acquiring an interest in these permits is an exciting opportunity to grow our portfolio in the emerging Eastern Mediterranean basin and we look forward to finalising the agreement," Woodside chief executive Peter Coleman said in a statement.
Mr Coleman later told investors and media the agreement demonstrated the company’s strategy to further expand internationally with interests in world class projects.
“This is important in a number of ways…Woodside is now demonstrating some of the elements in the strategy that we outlined earlier this year and I think we’re well placed to execute that,” he said.
“We know that the hard work is about to begin - which is really now capturing the value of it, but we’re very pleased with the work that we’ve done with the operator and the support we’ve had.”
The project is tipped to take advantage of increasing gas demand from Israel, with up to 50 per cent of gas produced going into the domestic market.
The base case for the project, from which Noble expects to begin production in 2016, proposes an onshore production facility being built in Israel.
Mr Coleman said the operating environment in the country was attractive, both in respect of security but also sourcing labour.
“We see it actually as a very competitive labour market…there are no impediments to being able to access labour in Israel.”
Woodside has previously announced it had lodged bids for exploration licenses in Cyprus, which Mr Colemand said are still under negotiation.
He said the Israel project was a very important step for the company, but would not take the spotlight off existing developments in Australia.
“We’ve always said we wanted to fill the portfolio with world class opportunities and that the best ones would go first…we believe we can fund this and it will get supported in the investment market.
“We see this as a complementary development and we look forward to being able to develop them all at the same time.”
The company will pay a further $US200 million once laws permitting LNG exports from Israel are in place, and a further $US350 million once a final investment decision is made on an LNG development.
Woodside had been working on agreeing to terms on the licences for several months.
The company's shares were up 26 cents at $34.06 at 1041 AEDT.