UPDATE 1-Woodside delays signing landmark Israeli gas field deal
* Last-minute snag on profit-sharing with Israel
* Woodside looks to resolve issues and sign deal (Adds hurdles to deal)
JERUSALEM/MELBOURNE, March 28 (Reuters) - Australia's Woodside Petroleum Ltd has delayed signing a landmark agreement to take up to a $2.7 billion stake in Israel's Leviathan gas field, but said on Friday it was in talks to overcome remaining issues.
The agreement was supposed to be signed on March 27, however sources have said Woodside was balking at a push by the Israeli government to cut the potential share of profits Woodside could take on liquefied natural gas (LNG) exports to Asia.
"Discussions continue with the parties and the Israeli government with a view to resolving the remaining issues and executing definitive agreements," Woodside said in a statement to the Australian stock exchange.
Another potential snag to the deal is an effort by the Israeli government to halt exports at times of domestic emergencies, a proposal that could tarnish the appeal of Israeli gas among potential buyers looking for certainty of supply.
By bringing in Woodside, an LNG specialist, the U.S.-Israeli group developing the project and its 540 billion cubic meters (19 trillion cubic feet) of reserves are looking to access a broad market, particularly Asia.
Woodside tentatively agreed in February to take a 25 percent stake in the project, owned by Texas-based Noble Energy, and Avner Oil Exploration, Delek Drilling and Ratio Oil Exploration.
The deal was first announced in December 2012 but the sides held off on finalising it until Israeli regulations on exports and taxation became clear.
The Leviathan discovery in 2010, along with a sizeable find a year earlier, came as a surprise for Israel, which has always been dependent on fuel imports.
The government scrambled to update its policies to make sure the domestic market remained a priority and the state received a fair share of the revenues without upsetting the companies involved by cutting too much into their profits.
Last June the government decided that 40 percent of the country's total reserves could be exported. And just two days ago a government panel presented its preferred model for taxing the exports.
There has been a lot of speculation on how Leviathan will be developed and where the gas could be sold.
The Israeli partners have said that 16 billion cubic metres of gas a year will be produced in the first stage, about half of which will be sent by pipeline to Israel, Jordan and the Palestinian Authority. The rest will be sold through a separate pipeline to another neighbor, perhaps Turkey or Egypt.
At the same time, there are more complex plans for LNG exports with an eye to serving Asian markets. The LNG exports would be processed onshore at a facility in Cyprus or, more likely, at sea on a floating LNG vessel. (Reporting by Ari Rabinovitch and Sonali Paul; Editing by Richard Pullin)
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