The Ministry of Finance has summoned Israel's gas and oil exploration and production companies - Delek Group Ltd. (TASE: DLEKG), Avner Oil and Gas LP (TASE: AVNR.L), Delek Drilling Limited Partnership (TASE: DEDR.L), Ratio Oil Exploration (1992) LP (TASE:RATI.L), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and US operator Noble Energy Inc. (NYSE: NBL) - that hold licenses for the country's large reservoirs, to a meeting next week. The meeting will be an attempt to find a solution regarding their holdings in the Leviathan and Tamar gas fields, following Israel Antitrust Commissioner David Gilo’s decision to break up the gas monopoly. The companies will meet with Ministry of Finance Budgets Chief Amir Levi and National Economic Council head Eugene Kandel.
A hearing will be held later this month, where Antitrust Commissioner David Gilo will decide whether the holdings in Tamar and Leviathan constitute a cartel. The Ministry of Finance will try and provide solutions prior to the Antitrust Authority’s decision. Energy market sources believe that Delek Group controlling shareholder Yitzhak Tshuva is considering giving up Delek’s holding in Tamar, and maintaining its Leviathan holding. However, nothing has as of yet been agreed upon by all parties.
Gilo said last week that he is “aiming to change the market structure in order to generate genuine competition between the reservoirs in the natural gas market. The anchor for this is our allegation of an agreement in restraint of trade that caused the monopoly. We’re intervening because of the allegation that the monopoly was obtained through an alleged agreement in restraint of trade made by the parties."
The antitrust commissioner previously said that he objects to “subjecting the entire Israeli economy to a formidable gas monopoly, which is expected to control most of the economy's energy sources for many years to come. Israeli consumers deserve not only natural gas. They deserve natural gas at a competitive price, and a competitive gas sector.”
Noble has already warned that it will turn to international courts regarding Gilo’s initiative. The conflict between the state and developers regarding cartel arrangements may cause a significant delay in the development of the Leviathan gas reservoir, which is controlled by Noble and Delek. The reservoir was expected to start supplying gas to the market in 2018, with an $8 billion investment in the first stage. The antitrust authority believes that there is no real reason for the developers to delay the development of the field.
Published by Globes [online], Israel business news - www.globes-online.com - on January 14, 2015
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