Tamar gas field
Photo: Reuters
Israel: Tshuva's Delek, Noble need to sell off stakes in Tamar gas field
Israel moves to restructure ownership over natural gas fields: Israel's Delek will be forced to sell of shares of Tamar field, while Noble Energy will accept restrictions on ability to intervene in sales' conditions; state still awaiting response.
Israel has decided to restructure the private ownership of its two biggest natural gas fields, a move which will see new regulations put in place to break what Israel's anti-trust authority deemed a monopoly.
An inter-ministerial committee with representatives from the Israel Antitrust Authority, Finance Ministry, head of the National Council for Economics, Economics (Infrastructure) Ministry, Energy and Water Ministry and the Attorney General's office published an outline for the restructuring which it presented to Yitzhak Tshuva's Delek and Noble Energy Thursday.
Tamar gas field (Photo: Albatros)
Noble and Delek are the largest stakeholders in Israel's two main gas fields - Tamar, which began production in 2013, and Leviathan, the world's largest offshore gas discovery of the past decade, which they hoped to bring online in 2018.
Representatives from the two companies have yet to respond to the proposal, which called for Delek to sell its shares in the Tamar field and Nobel dilute some of its shares, as well as accept a cap on local sales prices for the next five years.
Noble and Delek have already agreed to sell their licenses to two nearby smaller gas fields – Tanin and Karish – though it is unclear whether this agreement still stands, as it was made as an initial concession to regulators.
According to the outline, the State will regulate prices on natural gas sales until the ownership restructuring is complete, followed by a cap on sales prices for the next five years.
The government is working to create an ownership structure in which the remaining gas in the Tamar field will be opened up to a new company and the two's additional partner – Isramco.
Thus, the state hopes to create competition between the two large fields, by preventing those running the fields to influence the sales and practices of the other fields, de facto decentralizing the new and lucrative market.
The outline leaves the ownership of the Leviathan field untouched, but stipulates that the three partners – Delek, Noble and Ratio Oil Exploration – must market their gas independently and without coordinating between when selling on the local Israeli market.
At this stage, Tshuva's Delek has agreed to sell his stake in Tamar, but not in the smaller fields. Moreover, Tshuva is conditioning his agreement on assurances from the State it will not make any further changes regarding Leviathan, a demand that insiders say the government is inclined to accept. On the other hand, Noble has refused to any change in policy.
Furthermore, it is unclear whether the March 17 elections will hinder the proposal's implementation.
It is worth noting that the proposal laid out Thursday is the result of a long inter-ministerial deliberation process and marks the State's initial proposal for what is expected to be long negotiations with the different partners.
It is possible that until the deal is finalized, a new government will be in power and will have to decide whether or not to confirm the deal reached between the sides.
Together the companies say they have invested about $6 billion in Israel and they had planned to spend another $6.5 billion to develop Leviathan.
