'Competition in a Monopolistic Market': Noble Allows Rivals to Sell Tamar's Gas

Alongside the agreement, Noble struck a deal with the Israel Electric Corporation, under which the Israel Electricity Company will buy gas from the Tamar reserve at lower prices

Israel Fisher
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Tamar's oil rig
Tamar's oil rigCredit: Albatross Photography
Israel Fisher

Noble Energy reached an agreement with its partners in the Tamar natural gas reserve enabling them to sell gas independently, after previously refusing to allow the majority partners in the offshore reserve to sell gas for less than Noble was charging for gas in the Leviathan reserve.

Noble, which was bought out by the U.S.-based energy giant Chevron, holds a larger share of Leviathan.

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Noble is the company that operates the Tamar platform, and thus can shut the gas flow. In the past, the company hinted it would do just that.

After Noble blocked them from selling gas, the majority partners in Tamar demanded that the Israel Competition Authority intervene.

On Sunday, the Competition Authority published an agreement in which Noble agreed that it would honor sales made by the other partners. Noble has rights to 25% of the reserve.

Alongside that pact, Noble reached an agreement with the Israel Electric Corporation, under which the IEC will buy gas from the Tamar reserve at lower prices than it has been paying for gas from Tamar and Leviathan until now. In October, the IEC struck a deal with the majority shareholders in Tamar to buy gas at this lower price.

The compromise will save the IEC some 100 million shekels ($30 million) in its fuel acquisition.

Last year, the majority shareholders in the Tamar reserve – Isramco (29%), Tamar Petroleum (17%), Dor Gas (4%) and Everest (3%) – ran into a conflict with Delek Drilling (22%) and Noble Energy, which together control 47% of the reserve. Delek and Noble said they would block sales from Tamar to the IEC at the reduced price of $4.30 per heat unit. Delek and Noble also control 85% of the larger Leviathan reserve, which means that they earn more when the IEC purchases gas from Leviathan instead of from Tamar.

Under pressure from the Government Companies Authority and the deputy attorney general, Delek agreed to forego its veto power over deals involving Tamar, but Noble’s opposition remained an obstacle.

After the majority partners complained, the Competition Authority launched an investigation into Noble’s conduct and into whether the company was taking advantage of its monopoly power.

The agreement signed Sunday ensures that Noble and its new parent company Chevron will not cut off Israel’s gas flow.

The compromise is now being released for public feedback, and in 20 days it will be submitted to the antitrust court for approval.

It states that the antitrust commissioner will not take enforcement action against anyone from the Noble group over the company’s actions as detailed in the complaint. It also states that it does not constitute an admission of wrongdoing by Noble.

Lobby 99, an NGO campaigning to ensure the government receives its royalties for Israel’s natural gas, praised the decision to ensure that the majority partners could sell gas from Tamar separately, “in order to enable a bit of competition in this monopolistic market.”

IEC Chairman Yiftach Ron-Tal said the company would keep negotiating to lower its gas acquisition rates, and called the 100 million-shekel discount an “unusual accomplishment in the fight to lower the cost of living in Israel.”

Competition Authority director general Michal Halperin called the deal “a competitive breakthrough in the natural gas market,” enabling competition among the Tamar partners and between Tamar and Leviathan, for the benefit of industry and anyone with an electricity bill.

The Tamar partners and Chevron’s Middle East representative also praised the deal.

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