Delek Drilling CEO Confident of Meeting Divestment Deadline

Move part of breakup of Israel's gas cartel.

Tamar
Albatross Aerial Perspective

The owners of the Karish and Tanin offshore natural gas fields are confident of meeting a deadline proposed by the Israeli government to sell the fields as part of an effort to break up the gas cartel, Yossi Abu, CEO of Delek Drilling, said Thursday.

“There was no other choice but to agree to this roadmap,” said Abu, whose Delek Drilling is a unit of Delek Group. “We were aware we were taking a hit, but we didn’t want to wait any more to develop the gas fields,” he told Reuters, referring to their reluctance to sell off billions of dollars in assets.

The fields together hold about three trillion cubic feet of gas but their development has been at a standstill since a regulator in December deemed a partnership between Delek Group and Noble Energy a monopoly. Prime Minister Benjamin Netanyahu has been pushing to ratify a disposal deal quickly so exploration can resume.

Under a roadmap put forward by the government, Noble and Delek will have 14 months to find a buyer for Tanin and Karish, which analysts say could together be worth $1.5 billion.

Delek will also have six years to sell its 31.25% stake in the larger Tamar field, and Noble is being forced to lower its Tamar stake to 25% from 36%. Tamar holds 10 TCF, which analysts value at between $13 billion and $14 billion.

Noble and Delek will keep control of the largest field in the region, Leviathan.

“We believe that if this roadmap is approved, it will bring regulatory certainty and stability to Israel and we are confident that we will be able to bring to Israel new operators to develop Karish and Tanin,” Abu said.

If the group does not complete a sale in the allotted time, the projects will be turned over to a trust that will sell to the highest bidder.

Italian utility Edison, owned by France’s EDF, had expressed interest in Tanin and Karish, but talks faltered due to the regulatory uncertainty.