Decision on status of gas companies postponed

Israel Antitrust Commissioner David Gilo says he will reconsider whether Delek and Nobel's presence in Israel's Mediterranean gas sector constitutes an illegal "restrictive arrangement."

By
February 24, 2015 19:33
2 minute read.
Israel's natural gas

Israel's natural gas. (photo credit: MINISTRY OF NATIONAL INFRASTRUCTURES)

Antitrust Commissioner David Gilo announced on Tuesday that he would be postponing his decision regarding the status of the Delek Group and Noble Energy, in order to enable further negotiations between the gas companies and the government.

The future of the two companies, which are the main shareholders in both the Tamar and Leviathan gas reservoirs, became uncertain when on December 23, Gilo announced that he would be reconsidering whether their presence in Israel’s Mediterranean gas sector constitutes an illegal “restrictive arrangement,” similar to a cartel.

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In addition, the commissioner nixed his support for a proposed consent decree that would have allowed the companies to simply sell two smaller gas reservoirs, in favor of remaining in both Tamar and Leviathan.

The 282-billion cubic meter Tamar reservoir, located 80 kilometers west of Haifa, has been online since March 2013 and is meant to fulfill mostly domestic demands. The neighboring 621-b.cu.m. Leviathan basin, about 130 km. west of Haifa, has yet to be developed but is likely to serve a combination of export and local customers.

Last Thursday, an interministerial team – including Antitrust Authority, Finance Ministry, National Economic Council and National Infrastructure, Energy and Water Ministry representatives – presented the companies with a draft outline aimed at solving a situation that has frozen Leviathan’s development.

In the outline, the united government front demanded that the Delek Group exit the Tamar reservoir entirely and that Noble Energy sell a portion of its shares of the basin – specifically, any gas intended for the domestic market. The document also called for the companies to separately market any gas from Leviathan heading to Israeli consumers. In addition, they would be required to sell their two smaller reservoirs, Karish and Tanin, as had been originally suggested in the proposed consent decree.

After the government presented the companies with the outline on Thursday, discussions among the parties continued and progress was made, government officials told The Jerusalem Post on Tuesday.

“The antitrust commissioner has postponed the publication of a determination regarding the restrictive arrangement issue in the natural gas sector for two months, in light of the mobilization of government ministries and the readiness of the parties to seek a solution to the competition problem on the basis of the government outline,” a statement released by Gilo said. “Joint working teams will continue during this time to work on an agreed upon outline to solve the crisis.”

Gilo’s decision to postpone the determination for two months indicates a settlement on the issue will occur only following the formation of the new government.

While the antitrust commissioner has the power to make some determinations – like the restrictive arrangement issue – regardless of government approval, many elements of the proposed outline require government authorization, the officials told the Post.

One such issue defined in the outline that demands government attention includes potential price ceilings to be implemented in the gas sector, the officials said.

To reach a full-fledged settlement on the gas issue, government involvement will be required, the officials confirmed.


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