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Noble Energy Inc. (NBL - Analyst Report) struck a deal with the Cyprus government for the development of a Liquefied Natural Gas (“LNG”) terminal on the island, as per media reports. The deal received preliminary approval from the Cypriot government. The parties will sign a Memorandum of Understanding soon.

Israel’s Delek Drilling LP and Avner Oil Exploration LLP will also be a part of the project. The Cyprus government in order to revive its beleaguered economy intends to exploit its vast gas resources as well as discoveries in the Eastern Mediterranean via this LNG terminal.

The details of the agreement were however undisclosed. The cost behind the project is projected to be roughly $10 billion.

Noble Energy is a prime operator in Eastern Mediterranean and has several exploration prospects, the most significant being the Tamar gas fields and the Leviathan Basin. The company in late 2011 received the concession to explore the Aphrodite gas field located off the coast of Cyprus. It is estimated to have a reserve volume of 991 billion cubic meters.

The proposed LNG complex in Cyprus will help in easy transportation of Noble Energy’s gas production to the energy-hungry market of Israel as well as to the countries of Asia and Europe.  The Israeli programs alone will lead to an upswing in net profits by around 30% by 2015 for the company.

With gas exports in Israel expected to hit $60 billion in the next 20 years, this LNG project would prove a critical component for growth for heavy investors like Noble Energy.  

Israel is expected to come at par with Saudi Arabia in terms of energy reserves, as per the World Petroleum Council. We believe Noble Energy’s strategy to invest a hefty $400 million in the Eastern Mediterranean in 2013 will certainly fetch attractive returns.

Currently, Noble Energy retains a Zacks Rank #3 (Hold). Other oil and gas operators profiting from exploration initiatives at the moment are Zacks Ranked #2 (Buy) Encana Corp. (ECA - Analyst Report), Anadarko Petroleum Corp. (APC - Analyst Report) and EOG Resources Inc. (EOG - Analyst Report).

Houston, Texas-based Noble Energy operates internationally and engages in the acquisition, exploration, development, production, and marketing of crude oil, natural gas and natural gas liquids.

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