Antitrust Authority: Noble, Delek should sell smaller reservoirs, remain in Leviathan
01/30/2014 20:06
Replacing energy giants with competitors in natural gas basin is physically impossible, says antitrust commissioner.
Gas reception facility. Photo: Courtesy Noble Energy
Although replacing Noble Energy and the Delek Group with competitors in
the Leviathan natural gas basin might have been ideal, it is physically
impossible for the Antitrust Authority to remove the partners from the
reservoir, Commissioner David Gilo said on Thursday.
“I would also have preferred that Delek and Noble left Leviathan, and
that there was competition between Leviathan and Tamar, but I do not
have the authority to physically remove them from Leviathan,” Gilo said
during a Knesset Economic Affairs Committee hearing on the subject.
“All I can do to help is declare that there was a violation, and only
the court could remove them physically from the basin, and this could
take many years.”
Gilo has been exploring the issue of whether the majority presence of
Houston- based Noble Energy and the Israeli firm the Delek Group in
both the Tamar and Leviathan reservoirs constitute a cartel, and whether
competition must be introduced into the latter of the two.
To the dismay of the politicians and NGOs advocating such a move, Gilo
has determined that the companies can, in fact, remain in Leviathan,
provided that they sell their smaller reservoirs Karish and Tanin.
“We initiated a process that was based on the fact that they did not
seek approval from the Authority when they entered Leviathan,” Gilo
said.
The 282 billion cu.m. of Tamar reservoir, which came online in March
2013, is owned 36 percent by Noble Energy, while Delek Drilling and
Avner Oil Exploration – both subsidiaries of the Delek Group – each own
15.625%.
The firms Isramco Negev 2 and Dor Gas own 28.75% and 4%, respectively.
Tamar’s much larger, approximately 537b.cu.m., neighbor Leviathan is
also by and large in the hand of Noble and Delek, with Noble owning
39.66% and Delek Drilling and Avner Oil Exploration each holding 22.67%.
A third partner, Ratio Oil Exploration, holds 15%.
The smaller Karish and Tanin reservoirs – in each of which Noble Energy
has a 47% hold and the two Delek Group subsidiaries own 26.5%
respectively – contain a total of roughly 70b.cu.m. of natural gas.
Gideon Tadmor, the CEO of Avner Oil Exploration and chairman of Delek
Drilling, reminded those partaking in the committee session of the
billions of dollars the partners have invested in developing the gas
reservoirs.
“It is impossible to exaggerate the importance of developing Leviathan.
This is the peak of Israeli gas development,” Tadmor said. “I always
said, ‘The more the merrier,’ but what can we do, no one else found the
gas.”
While this approach may create shortterm competition and avoid
prolonged litigation, committee chairman Avishay Braverman (Labor) said
he is uncertain this compromise will benefit the consumers.
MK Shelly Yacimovich sharply criticized Gilo, telling him that his
plans are “not a compromise but a letter of surrender to the dictates
of [Yitzhak] Tshuva,” the majority shareholder of the Delek Group.
“There are very few people that history has placed at such a dramatic
crossroads regarding the fate of Israel, and the expectations from you,
David, are many, and as of now, unfortunately, you are not living up
to any of them,” Yacimovich said. “You are highly responsive to the gas
companies and to their many skilled speakers, but to the needs and the
demands of the public.”
“All you have to do,” she continued, “is something simple – declare the
business acquisition rights to the field as constituting a cartel.”
Amir Hayek, CEO of Manufacturers Association, sent a letter prior to
the meeting with Braverman, saying that his organization sees great
importance in ensuring reliability of gas supply as well conditions for
competition. None of these goals, however, can be realized without
allowing for Leviathan’s development, he said.
Similar to Hayek’s comments, MK Ariel Attias (Shas) said that while it
would be ideal to operate in the most just manner possible, the issue
remains – the country needs the gas sitting in Leviathan.
In response the criticism coming from Yacimovich and heads of NGOs
throughout the meeting, Gilo said that this plan is not what the Delek
Group suggested, but rather terms upon which the Antitrust Authority
insisted.
“They had no choice but to accept what we demanded,” Gilo said, saying
that he is only acting with the good of the public in mind. “If
competition does not occur, we will insist upon price controls and will
not hesitate.”
Link to source:
http://www.jpost.com/Enviro-Tech/Antitrust-Authority-Noble-Delek-should-sell-smaller-reservoirs-remain-in-Leviathan-339923
