Israeli Antitrust Commissioner Delays Ruling on Noble-Delek’s Fate

David Gilo puts off deciding if the gas firms are a monopoly for two months, passing the ball to the next government.

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Delek Group controlling shareholder Yitzhak Tshuva.
Delek Group controlling shareholder Yitzhak Tshuva.Credit: Tomer Appelbaum

Antitrust Commissioner David Gilo has decided to delay a decision on whether to declare the country’s offshore natural gas fields a monopoly for two months to allow time for an agreed solution to be reached. This will place the decision in the hands of the government that is formed after the March 17 Knesset election rather than the current government.

The decision to defer action followed a meeting on Monday evening between government officials and gas industry executives, including Delek Group controlling shareholder Yitzhak Tshuva and Keith Elliott, the senior vice president for the Eastern Mediterranean of Texas-based Noble Energy. Noble and the Delek Group together own 85% of the major Leviathan gas site off Israel’s Mediterranean coast, and also control the nearby Tamar well, a situation that in December Gilo said created a monopoly.

Monday’s meeting, the second since the state presented what it said was its final plan for the breakup of the monopoly, was an effort to bridge the gaps between the state’s position and that of the companies. It was said to have taken place in a positive atmosphere and to have produced substantial progress. Nonetheless, the complexity of the issues involved and the many questions that still remained unresolved made it impossible to have the principles of an agreement brought to the outgoing government cabinet for its approval.

At the same time, Labor Party MK Shelly Yacimovich contacted Attorney General Yehuda Weinstein expressing her concern about the prospects that the current government would “pull a fast one,” as she put it, in coming to a resolution of the dispute. She threatened to file a High Court petition to block any effort by the current cabinet to consider a settlement of the dispute over the gas monopoly.

At that point, Antitrust Commissioner Gilo announced that a decision based on a hearing that his agency had held last month with the partners in the Leviathan field would be deferred for two months. The hearing was convened as a result of Gilo’s announced intention to declare the current ownership structure a restraint of trade in the gas sector.

Yesterday, however, the Antitrust Commission said it had extended the deadline to April 23 for the sides to reach a deal before charging the companies with restraint of trade. Analysts had been expecting a decision in the next week or two. The delay follows the proposal from a number of government regulators made last week that all of Israel’s major gas fields should be owned separately. Delek and Noble would still be allowed to control Leviathan, but gas from Tamar slated for Israeli consumers would need to be sold to a third party to compete with Leviathan and two smaller sites, Tanin and Karish.

Leviathan is one of the world’s largest offshore gas finds of the last decade, with some 22 trillion cubic feet of reserves. Production had been expected to begin in 2018 following an investment of around $6.5 billion. Tamar was discovered in 2009 and started producing nearly two years ago. Earlier this month, Energy Minister Silvan Shalom said Noble and Delek would have to sell some reserves to avoid being deemed a monopoly and that the government would work to find a balance between increasing competition and ensuring Leviathan and Tamar were developed.

The share prices of Delek’s two gas units -- Delek Drilling and Avner Oil and Gas Exploration – dropped in trading on Tuesday. Delek Drilling lost just under 4% of its value and Avner shares declined by 5.2% for the day.

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