Wednesday, February 18, 2015

Israel: Gov't officials presenting outline to solve natural gas turmoil

Government officials have formulated an outline to solve the current natural gas stalemate, which has resulted in the freeze of the Leviathan reservoir's development, government sources told The Jerusalem Post on Wednesday late afternoon.

"There is a government outline that all the government is supporting for the solution of the gas problem," the sources said. "An outline was presented to Noble Energy and at the moment is being presented to Delek."

While the government sources would not expand upon the details of the outline at the moment, its contents are aimed at putting an end to nearly two-month-long situation in which the reservoir partners and the Israel Antitrust Authority have been butting heads.

On December 23, Gilo announced that a proposed consent decree regarding the entry of the Delek Group and Noble Energy into the Leviathan reservoir would not be submitted to the Antitrust Tribunal for approval as had previously been agreed upon. In addition to nixing his support for this arrangement, which would have allowed the companies to sell two smaller reservoirs in order to remain in Leviathan, Gilo said he would consider whether their stake in Leviathan constitutes an illegal “restraint of trade,” or restrictive agreement, similar to a cartel.

Houston-based Noble Energy owns a 39.66% stake of the 621-billion-cubic-meter Leviathan reservoir, while Delek Group subsidiaries Delek Drilling and Avner Oil Exploration each hold 22.67%, and Ratio Oil Exploration has a 15% share.

Noble Energy also holds 36% of the 282 billion cu.m. Tamar gas reservoir –which began flowing to Israel’s domestic market in March 2013.The Delek Group’s Delek Drilling and Avner Oil Exploration each own 15.625%, Isramco controls 28.75% and Dor Gas has 4%.

While the Tamar reservoir has been flowing into the Israeli domestic gas network since March 2013, development of the Leviathan basin has been stunted due to the disagreement between the companies and the Antitrust Authority.

Foreign stakeholders and local industry sources have continually warned that the uncertainty in Israel's gas regulatory environment could discourage further investment into the Israeli hydrocarbon sector. However, Knesset members and social activists have thus far hailed the Antitrust Authority’s move as an opportunity to tackle corporate interests and bring natural gas to Israeli citizens at a competitive price.

Regarding the new outline that  officials have been presenting to the gas companies on Wednesday evening, the government sources assured the Post that all relevant government authorities and ministries stand behind the document.


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