Israel investment gives oil giant Shell cold feet due to fear of Arab retaliation

(Israel Hayom/Exclusive to Just days after Israel joined the exclusive club of natural-gas producing nations, one industry giant appears less than pleased. 

Click photo to download. Caption: Shell truck. Royal Dutch Shell is considering selling its share of another company because that company bought a share of the Israel Leviathan natural gas field reserve. Credit: Stefan Kühn via Wikimedia Commons.

Israel’s Tamar offshore gas field, situated 50 miles west of Haifa, started production after four years of exploration and drilling by the Jewish state, the Israeli government announced last Saturday. Israel has an additional gas field, Leviathan, about 80 miles from Haifa’s coast.

Royal Dutch Shell, one of the largest multinational oil companies worldwide, is mulling whether to sell its $7 billion share of the Australian energy company Woodside after Woodside purchased a large share of the Leviathan natural gas field’s reserves, just off the Israeli coastline.

The Anglo-Dutch oil giant is interested in selling because the company fears that direct or indirect investment in Israel could strain its relations with Arab nations.

Woodside recently signed a deal to purchase 30 percent of the Leviathan field’s reserves for $1.5 billion. Speaking with the Wall Street Journal, Luke Smith, a senior energy analyst at the Commonwealth Bank of Australia, said Shell’s direct or indirect investment in Israel could complicate its extensive activities in Arab oil-producing nations.

Some of Shell’s most lucrative investments are in countries that have hostile relations with Israel. Most of them do not maintain formal diplomatic relations with the Jewish state.

Smith speculated that Shell might be interested in selling its share of Woodside to BHP Petroluem, a unit of Australia's BHP Billiton Ltd. Shell has an estimated 23 percent interest in Woodside.

Royal Dutch Shell is a joint Anglo-Dutch company that was established in 1907 and employs more than 90,000 people worldwide. Its sales totaled $467 billion in 2012, and profits reached $26.8 billion. The company has headquarters in The Hague and in London.

Posted on April 4, 2013 .