Israel's Gas Market Concentration: Committee Rejects Forced Sales, Favors Separate Sales

A special Israeli committee has decided against forcing energy giant Chevron to sell its stakes in the Tamar and Leviathan natural gas fields, opting instead for measures to increase competition. The inter-ministerial committee, headed by Energy Ministry Director-General Yossi Dayan, concluded that while Tamar and Leviathan control 66% of the domestic market, a forced divestment by Chevron is not the recommended solution.

Instead, the committee proposes implementing a "separate sales" requirement for the Leviathan field starting January 1, 2030. This would allow partners in the field to compete for contracts independently, rather than acting as a single entity. For the Tamar field, the recommendation is to ensure that partners can sell gas separately without contractual limitations.

The committee also suggests incentivizing new gas fields to sell their output separately and encourages investment in exploration and development of new reserves. This approach aligns with the view that increasing supply and adding new fields is the key to genuine competition, as previously stated by Dayan and Energy Minister Eli Cohen.

While not mandating ownership changes, the committee's report aims to foster competition within existing fields by separating sales and to expand overall supply through new discoveries and players. This balanced approach seeks to ensure sufficient supply for the domestic market and competitive prices while encouraging further investment and allowing for exports that support project economics. The committee also recommends considering the impact on domestic competition and prices, as well as the contribution to exploration and production investments, when issuing export permits.

Additional recommendations include advancing cost-sharing for new field connections and exploring complementary incentives for exploration investments, particularly for smaller fields. The committee acknowledges the significant state revenues generated from gas royalties and taxes, projecting nearly 2 billion shekels from natural resource royalties alone in 2025.