Delek Drilling (>> Delek Drilling Limited Partnership) and sister company Avner Oil (>> Avner Oil Exploration Ltd. Partnership) have a combined 45.34 percent stake in Leviathan, the world's largest offshore discovery of the past decade.

"We are working and planning for the future on the assumption, and it's certainly a reasonable assumption, that more gas will be found offshore Israel and Cyprus," said Delek Drilling Chief Executive Yossi Abu.

"Our goal is to make an investment decision by the end of the year so we can produce gas at Leviathan by 2017-2018."

On a piece of paper he drew what he said was the most likely first stage of development.

Atop Leviathan plans call for a floating production storage and offloading vessel (FPSO), not a platform, which will process 16 billion cubic metres (bcm) of gas a year.

Abu said about half will be sent by pipeline to Israel, Jordan and the Palestinian Authority. The rest will be sold through a separate pipeline to another neighbour, perhaps Turkey or Egypt.

At the same time, there are more complex plans for liquefied natural gas (LNG) exports with an eye to serving Asian markets.

LNG exports would be processed onshore at a facility in Cyprus or at sea on a floating LNG vessel, which Abu said would be the preferred approach.

Australia's Woodside Petroleum (>> Woodside Petroleum Limited), an LNG specialist, in February agreed to buy a 25 percent stake in Leviathan for up to $2.71 billion (1.62 billion pounds). The deal, due to be finalised on March 27, puts a value on the field of $10.8 billion.

Leviathan was discovered in 2010 about 135 kilometres from the Israeli port city of Haifa in waters 1,600 metres deep.

Texas-based Noble Energy (>> Noble Energy, Inc.) is leading the development with a 39.66 percent stake. In addition to the stakes held by Delek and Avner, both subsidiaries of conglomerate Delek Group (>> Delek Group Ltd.), Ratio Oil (>> Ratio Oil Exploration Ltd. Partnership) has 15 percent.

Abu said with Leviathan as the hub, eventually infrastructure could be joined with other gas fields that might be discovered and exports could be coordinated with other groups.

As well as Leviathan, which has estimated reserves of 540 billion cubic metres (BCM), Israel has the smaller Tamar field, which is already operating and mostly earmarked for domestic consumption.

"What is nice about this amazing puzzle is that you can play with it from a lot of directions, and we have a lot of flexibility that you don't see in a lot of discoveries in the world," he said.

Delayed as the Israeli government weighed a final export quota, Israeli media have reported some uncertainty over plans still remains due to a yet-to-be-determined tax policy on gas exports.

Asked whether the deal might be held up further, Gideon Tadmor, chairman of Delek Drilling and CEO of Avner, said: "We are determined to develop Leviathan as quickly as possible, and the state must show the same determination regarding the regulatory obstacles blocking development."

(Editing by Jason Neely)

By Ari Rabinovitch