Noble-Delek's dispute with Israel's Antitrust Authority to be Resolved Shortly
A cabinet decision is expected to be taken on Thursday ending months of uncertainty around Noble-Delek’s dispute with the Antitrust Authority. In December 2014, Israel’s Antitrust commissioner David Gilo announced that the Texan-Israeli consortium controlling Israel’s largest natural gas fields constituted a cartel that will likely distort competition in the domestic natural gas market and affect prices for the Israeli consumer. His announcement was a shift away from a previous agreement with the companies that would have allowed them to retain their shares in Israel’s 22 Tcf Leviathan field and 10 Tcf Tamar as long as they sold their stakes in the smaller Tanin and Karish fields.
Gilo’s change of heart threatened to delay the development of the Leviathan, previously planned for 2018, and to jeopordize regional deals being discussed between Israel and its neighbours Jordan and Egypt. The expected decision that will be released by the cabinet for security and diplomatic affairs is expected to achieve a compromise, allowing Noble and Delek to keep control of their shares in the giant Leviathan field. The companies will however be forced to sell shares in the Tamar field: Delek will have to sell its 45.32% stake in the Tamar field within six years and Noble will have to lower its stake from 36% to 25%. The companies will also be forced to sell their shares in Tanin and Karish within 18 months.
Israel’s regulatory uncertainty has constituted a great hurdle in the country’s path towards natural gas exports. Fears that further domestic disputes will push away potential investors have constituted a great motivation for a more lenient approach in handling the dispute between the partners in the Leviathan and Israel’s competition regulator. Israel is eyeing the regional market as a primary destination for its natural gas. Neighbouring Cyprus is also considering exports to Egypt. During a recent visit to Israel, a Cypriot delegation of high level officials discussed with the Israeli government the possibility of increased energy cooperation. The two countries explored merging natural gas pipelines to deliver natural gas to Egypt. In severe need for natural gas, Egypt is an ideal customer for East Med gas. Egypt can also constitute a route to far-reaching markets as it owns unused LNG export terminals that could be used by Cyprus and Israel.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat