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    Antitrust Commissioner's Resignation to Pave Way for Effective Development of Leviathan

Summary

Israel's antitrust commissioner resigns expressing his opposition to the government's lenient natural gas policy that may lead to unfair market competition.

by: Karen Ayat

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Featured Articles, News By Country, , Israel, East Med Focus

Antitrust Commissioner's Resignation to Pave Way for Effective Development of Leviathan

David Gilo, Israel’s Antitrust Commissioner, announced his resignation from his position. The resignation will take effect in August of this year. Gilo explained that the main reason behind his decision to step down is his disagreement with the government’s lenient approach towards Delek and Noble’s control of the largest share of the natural gas market, a natural gas policy that would, according to Gilo, lead to an unfair competition in the domestic natural gas market.

Gilo had announced in December 2014 that he was reconsidering a decision that would have allowed Texan Noble and Israel’s Delek to retain their shares in Israel’s largest fields, the Leviathan and the Tamar, if they sold their stakes in the smaller Tanin and Karish fields. Gilo’s determination to put an end to what he qualified as a cartel situation by forcing a break up of Noble and Delek’s partnership had triggered fears that Israel may lose its share of the regional market due to a delay in the production of the Leviathan beyond the expected 2018 date, and deter investors from participating in Israel’s offshore explorations amid a climate of regulatory uncertainty.

Since Gilo’s December announcement, talks between the companies and an inter-ministerial panel have been ongoing to reach an understanding that would allow the resumption of the progress offshore Israel. Gilo's May 25 resignation was interpreted as a sign that the proposal achieved between the government and the two companies would allow the partnership to remain intact on the condition Noble and Delek reduced their shares in the fields, a measure that would not, in Gilo's eyes, restore a healthy competition in the market. 

The resignation of Mr Gilo may pave the way for the effective and timely development of Israel’s 21 Tcf Leviathan field. Israel’s ongoing domestic disputes have constituted great hurdles on its emerging natural gas industry by creating an environment of regulatory uncertainty hostile to investors. Israel has been engaged in talks to export natural gas from the Leviathan and Tamar fields to neighbouring Jordan and Egypt, desperately in need for a reliable and cheap natural gas, and to the Palestinians. Egypt and Jordan are undergoing severe energy crises at home, and while a potential deal with Israel would provoke public uproar, spiking energy bills and severe shortages of energy compel them to enter into an agreement with Israel, located in their immediate vicinity. Egypt’s unused export terminals could even pave the way for access to far-reaching markets.

Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat 


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