UPDATE 1-Leviathan partners may have to sell smaller gas fields
JERUSALEM Jan 1 (Reuters) - The Israeli and U.S. companies developing the massive Leviathan natural gas field off Israel's coast may have to sell their stake in two smaller fields to avoid being branded a cartel by the antitrust authority.
Delek Drilling, one of the Leviathan partners, said on Wednesday the group was in "advanced negotiations" with the Israel Antitrust Authority to receive the regulator's approval for their operations in return for selling their stakes in the Tanin and Karish fields.
The company in a separate statement said they were still in talks with Australia's Woodside Petroleum to finalise a $1.25 billion deal announced in late 2012 to buy a 30 percent stake in Leviathan, the world's largest offshore gas find of the past decade.
Woodside has said it expects to make a final decision on Leviathan in the first half of 2014.
Tanin and Karish, which are licensed to Delek Drilling, Avner Oil Exploration and Texas-based Noble Energy , have combined estimated reserves of 3 trillion cubic feet (tcf).
That is far less than the deposits in the group's other fields -- Leviathan has 19 tcf and Tamar has 10 tcf.
The negotiations with the antitrust authority began over two years ago, Delek Drilling said in a statement to the Tel Aviv Stock Exchange, but gave no further details. Delek Drilling and Avner are subsidiaries of Delek Group.
Israel financial daily Calcalist reported that if an agreement is reached, the companies will have 2.5-4 years to sell their stakes in Tanin and Karish.
"At this stage it is only about negotiations and there is no certainty that the negotiations will lead to a binding agreement," Delek Drilling said.
Conglomerate Delek Group said this week it is examining a spinoff of its oil and gas activities into a separate company to be listed most likely in London.