JERUSALEM (Reuters) - The main Israeli partners developing the large Leviathan natural gas site said on Sunday they signed commitment letters with HSBC and J.P. Morgan for up to $1.75 billion (1.65 billion pounds) of financing.
Delek Drilling (TA:DEDRp) and Avner Oil Exploration (TA:AVNRp) said the funds would go towards the A1 development stage of the project.
Delek and Avner, units of conglomerate Delek Group (TA:DLEKG), hold a combined 45.3 percent of Leviathan. Texas-based Noble Energy owns nearly 40 percent.
Leviathan, which is expected to start production in 2019 or 2020, was discovered in the eastern Mediterranean in 2010. Much of its 622 cubic meters of natural gas is earmarked for exports.
The Leviathan partners have already signed a number of supply deals within Israel as well as a $10 billion contract with Jordan. Israel has also been searching for the best way to export the gas, including possible pipelines to Turkey, Egypt and Cyprus.
The $1.5-$1.75 billion loan will be provided against the encumbrance of the partners' shares in Leviathan, with variable interest due every three months. The principal will be repaid in a single instalment after four years through a raising of long-term bonds.
The A1 development stage for Leviathan includes the supply of gas from Leviathan to the domestic market, Jordan, the Palestinian Authority and other regional agreements, if signed.
"We ... are committed to act in order to pipe gas from Leviathan to the Israeli market and for export already in late 2019. The Leviathan project is taking a significant step forward today," Delek Drilling CEO Yossi Abu said in a statement.