Government Pushing for 5 Firms to Compete in Natural Gas Sales

Under plan, current monopoly structure of Israel's natural gas producing sector would be be broken up into competing marketing entities.

Avi Bar-Eli
Avi Bar-Eli
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Drilling at the Leviathan natural gas field off the Mediterranean shore.
Drilling at the Leviathan natural gas field off the Mediterranean shore. Credit: Courtesy Albatross
Avi Bar-Eli
Avi Bar-Eli

The government is proposing that the current monopoly structure of the country’s natural gas producing sector be broken up into five competing marketing entities, according to a blueprint of principles developed by the government over the past month.

The blueprint, TheMarker has learned, is based on principles that include having the Delek Group remain only in the giant Leviathan offshore production field, but would require it to sell its interests in other offshore fields – Tamar, Karish and Tanin. At the same time, Delek’s partner, the U.S. Noble Energy firm, would be allowed to retain its interest in both the giant Leviathan field and the Tamar field, but it would then have to relinquish the opportunity to sell natural gas on the Israeli domestic market.

Once the proposed breakup is in place, the state would then have quantities of gas at any given exploration site split – figuratively – among the owners of each site based on their ownership interests and each would be required to market its share of the gas separately so that the partners in the individual gas fields will then be competing with one another in selling the gas.

In this connection, based on the proposed model, gas from the Tamar site, which although large is eclipsed by Leviathan, would be sold separately by two groups. One group would consist jointly of Isramco and Alon Gas, which currently have a 33% interest in the field. The other group would be a new player that would buy the Delek Group’s interest in Tamar. The two would also split responsibility for selling Noble Energy’s 36% stake in the field on the domestic Israeli market based on a formula that would be determined in the future.

Noble Energy’s local sales of gas from the Leviathan field would also become the responsibility of its two remaining partners in the field: Delek and Ratio Oil Exploration, who would compete with each other. Delek would be barred from taking part, however, as long as it has not divested of its interest in Tamar. The government intends to give Delek five years to do so.

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