Antitrust Authority director general David Gilo has published the agreement with the partners in the Leviathan gas field to create a new competitor to the current gas fields. This removes the final obstacle to the signing of the farm-out agreement by Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) to sell 25% of the rights in the Leviathan gas field to Australia's Woodside Petroleum Ltd. (ASX: WPL) for $2.71 billion in Jerusalem this evening.
The Antitrust Authority's directive orders Delek and Noble Energy to sell to another party the Karish and Tanin gas fields, including the oil rights in the fields, and states that the fields' natural gas will only be sold in the domestic market by the buyer.
The directive also requires the sellers to grant the buyer of the fields an option to receive 15.2 billion cubic meters (BCM) of natural gas at a reduced price from Leviathan, if the aggregate proven reserves at Karish and Tanin are less than 70 BCM that Delek and Noble Energy must sell. Karish and Tanin have a high probability of finding an additional 27 BCM of gas in the future.
The directive states that the deadline for Israel Electric Corporation (IEC) (TASE: ELEC.B22), the largest natural gas customer, to announce that it is exercising its option purchases of a substantial quantity of gas, will be extended, in order to allow the buyer of the gas fields to compete with the current gas fields for an IEC contract and for contracts with other customers in Israel.
The agreed-upon directive, which requires court approval, was reached in view of the enforcement measures that Gilo initiated against the partners in the Leviathan field, which he alleged were violating section 2 of the Restraint of Trade Law. This claim was based on Delek and Noble Energy's acquisition of stakes in Leviathan at the same time as their holdings in the Tamar gas field and other gas assets.
Published by Globes [online], Israel business news - www.globes-online.com - on March 27, 2014
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