Middle East

Israel’s cabinet to rule on gas deal with Noble, Delek

 Israel's security cabinet on Thursday is expected to vote in favour of a plan that will allow a U.S.-Israeli energy group to keep control over most of the country's natural gas deposits but will also put some others up for sale.

The decision will end months of uncertainty and would be welcomed by Texas-based Noble Energy and Israel's Delek Group. Their control of two sizeable gas fields was put in doubt late last year after they were branded a monopoly.

Industry sources have said Noble and Delek will be allowed under the deal to keep control of Leviathan, the world's largest offshore gas discovery of the past decade.

"We are establishing a significantly more competitive market and putting in place mechanisms that will prevent price gouging," Eugene Kandel, a top economic advisor to Prime Minister Benjamin Netanyahu who led negotiations with Noble and Delek, said on Army Radio.

The 10-person cabinet for security and diplomatic affairs is an unusual forum to handle a primarily economic issue, but it allows Netanyahu greater control. Once the decision passes, the government would be unlikely to knock it down.

Delek will have six years to sell its entire 45.32 percent stake in another large field, Tamar, and Noble will have to lower its stake to 25 percent from 36 percent, industry sources said. Both companies will be forced to sell their stakes in two smaller fields, Tanin and Karish, in up to 18 months.

Tamar, with reserves of about 10 trillion cubic feet (tcf), began production in 2013 for the domestic market. Leviathan, which holds an estimated 22 tcf, is primarily earmarked for exports and is expected take three years to bring online. Tanin and Karish have a combined 3 tcf.

Israel's energy sector was blindsided in December when the anti-trust regulator deemed Noble and Delek a monopoly and could be forced to sell off their assets.

Noble in response halted investments in Israel, the companies threatened legal action and a number of long-term, multi-billion dollar export deals to Egypt and Jordan were thrown into jeopardy.

Netanyahu quickly cobbled together a government committee to find a compromise and his intention to speed up development of the fields rather than demand a more sweeping divestment led to the resignation of the anti-trust regulator. 

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