US-Israeli gas field control nixed over monopoly fears

TEL AVIV — Israel's Antitrust Authority on Tuesday moved to scrap a deal that gave US giant Noble Energy and Israeli partner Delek control over the Leviathan offshore gas field, citing monopoly concerns.

The decision, pending a confirmation hearing, effectively dismantles the monopoly held by Noble and Delek over Leviathan and Israel's smaller offshore gas findings.

"The entry of Delek and Noble into Leviathan created a situation in which these groups control all the gas reserves off Israel's coasts," the Antitrust Authority said in a statement.

The authority added that it would consider defining the two firms' Leviathan partnership as a "cartel".

The size of the Leviathan field is estimated at 535 billion cubic metres (bcm) of natural gas, along with 34.1 million barrels of condensate, making it the largest gas deposit found in the world in a decade.

Noble and Delek also control the Tamar field, which holds 250 bcm of natural gas, and lies 80 kilometres west of the northern Israeli port city of Haifa.

The authority had initially proposed an agreement under which Noble and Delek would enter Leviathan on condition they sell two smaller offshore gas fields to enable competition, which was to have been submitted to court within two weeks.

But it eventually went back on its decision.

"The authority received significant indications the agreement would not create a solution to the problem of competition," the statement said.

Deputy attorney general Avi Licht had recently called upon director generals of the government ministries to "rethink" the gas fields arrangement.

In a letter sent last week, Licht warned of the situation of "an essential infrastructure in Israel" being held "by one private body”, and called to "rethink" the regulation of the field.

Noble Energy slammed the antitrust authority's move, warning it would cast "a shadow over the future of the gas and crude oil industry in Israel".

Ahead of the announcement, Bini Zomer, director of Noble's local branch, warned any such move would "affect the future of Noble Energy investments" in Israel.

And Yitzhak Tshuva, owner of Delek, warned the move would lead to a drop of Israel's credit ratings, calling himself a "victim" in an interview on military radio.

Israel's offshore gas findings have shifted it from costly and unreliable imports to a growing self-sufficiency and the potential to become an energy exporter, recently advancing agreements to export gas to neighbours Jordan and Egypt.

Israel had relied on Egypt for roughly 40 per cent of its gas needs, but in April 2012 Egypt annulled the contract following a spate of bomb attacks that targeted the pipeline used to transport natural gas to Israel and Jordan.