Lighter Regulations for Natural Gas Exploration in Israel in Order to Break the Monopoly
The Israel Antitrust Authority (IAA) has released new guidelines for companies seeking to explore for natural gas in Israel.
The guidelines will make it easier for companies to cooperate in exploration and later in production, though they forbid the participants in the Tamar gas field from taking part in such projects.
According to the antitrust regulator, the aim of the new guidelines is to encourage new explorations in Israel in order to break the monopoly of Tamar participants. The two biggest natural gas reservoirs in Israeli waters, the operational Tamar and Leviathan, are both controlled by Noble Energy and Delek Group, who will not be allowed additional exploration licenses.
Under the title "Easing of Regulations on Companies Exploring for Natural Gas" the Antitrust Authority is trying to promote competition in the Israeli natural gas market. The new guidelines, issued as part of new exploration licenses for Plagic and Oz Blocks, state:
"Partnerships in natural gas exploration between companies that do not hold rights in the Leviathan or Tamar reservoirs should benefit from a more accommodating regime, so as to maximize the possibility of discovering a gas reservoir that can compete with the existing monopoly. Therefore, in general, I do not see any justification in obligating them to sell the gas reservoirs or to reduce their involvement in gas reservoirs that they will discover, whether in whole or in part."
The antitrust authority said that new requests for exploration licenses by small stake holders in the current two big gas fields will be dealt with on a specific basis. That probably means that the Isramco Partnership, with about 29% stake in Tamar and Ratio Oil, with 15% in Leviathan will not be allowed to take part in new exploration projects.
The new guidelines were set by temporary head of the antitrust authority, Uri Schwartz who replaced Prof. David Gilo last month, who resigned over a disagreement with the government concerning the natural gas framework. Although the Israeli Parliament approved the framework last August, it was only a symbolic gesture, as without either the antitrust authority approval or sidestepping the antitrust authority by the Economic Minister the framework is not valid.
The Israeli political system has just returned this past week from its summer recess though in light of the current tense security situation, the natural gas framework is longer at the top of the political agenda as it was just two months ago.
However as the Economy Minister, Arye Dery continues to refrain from signing off the natural gas framework and the appointment of a new antitrust authority head is still only at the beginning of the process. It seems that it would take few months before the natural gas framework will be approved, if at all.
Ya'acov Zalel