A More Lenient Resolution of Noble/Delek Antitrust Dispute
All eyes are on Israel as talks go on to resolve a dispute between Noble Energy and Delek Group, and the Antitrust Authority. The Leviathan and Tamar partners were accused by the competition regulator of potentially distorting the market by constituting a cartel. Israel’s competition commissioner Mr David Gilo announced in December 2014 that Noble and Delek controlled the country’s main offshore gas fields and recommended a break up of the monopoly. The announcement came as a shock as it constituted a shift from a previous agreement to allow for the partnership to continue on the condition of the sale by the Leviathan partners of two smaller offshore fields, Tanin and Karish.
The discovery of Tamar in 2009 and Leviathan in 2010 by Noble Energy promised natural gas independence for Israel for decades to come. After a lengthy debate, the country also approved gas exports in June 2013 by a decision ratified by the Supreme Court in October of the same year. Talks began for the sale of gas from Israel to its immediate neighbours, Jordan, Egypt and the Palestinian Authority, all in desperate need for the hydrocarbon. The dispute between Israel’s competition regulator and the partners in Israel’s largest fields threatened however to jeopardize regional deals and the timely development of the Leviathan, expected in 2018.
A renewed hope for a resolution of the dispute without the breakup of the monopoly resurfaced ahead of the formation of a new government in Israel. While no concrete information has been leaked yet, a shift towards a more lenient policy is expected. The Finance Ministry, the Prime Minister and the Ministry of Energy seem open to considering alternative solution that do not involve creating competitor of Noble and Delek. The move away from Mr Gilo’s recommendation is expected to be challenged by the latter before the Antitrust court for constituting a violation of antitrust laws.
Earlier this month, Israel’s Minister of Energy and Water Silvan Shalom and Prime Minister Benjamin Netanyahu authorized an agreement to sell gas from the Tamar reservoir to two Jordanian companies. 'The ministerial approval of the $500 million deal enabling the provision of up to 2.2 billion cubic meters of gas to the Arab Potash and Jordan Bromine companies over 15 years hopefully is a first sign that Israeli authorities can move beyond election rhetoric, and finally solve ongoing domestic debates relating to its natural gas reserves' said Dr Tim Boersma, fellow and acting director at Brookings.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat