Leviathan Partners Cancel $6.7 Billion Gas Deal with Dalia Energy

NewMed Energy, a partner holding approximately 45% of the Leviathan gas field, has announced the cancellation of a major $6.7 billion gas supply deal with Dalia Energy. The agreement, also involving fellow Leviathan partner Ratio, was intended to supply gas to Dalia's new power plants, "Dalia 2" and "Abshel." Dalia Energy expressed surprise and rejected the cancellation notice, asserting the deal remains valid.

The official reason given for the cancellation is the failure to meet the deal's conditional requirements, specifically securing financing approval and clearance from the Antitrust Authority. However, industry sources suggest the Antitrust Authority's review was leaning towards approval. The deal, set to run from 2030 to 2050, offered an attractive price of $4.7 per unit of heat, with a renegotiation clause in 2041 allowing for a 10% price fluctuation.

Analysts, such as Lior Weider of "Profit Multiplier," speculate that the cancellation is an aggressive negotiation tactic by the Leviathan partners to increase the price, possibly due to high demand for natural gas and more profitable export opportunities. The timing of the announcement, just before a holiday weekend, is seen as an attempt to minimize immediate market impact.

Dalia Energy insists the cancellation notice is invalid as it was not issued according to the agreement's terms. They maintain that discussions with the Antitrust Authority are ongoing and its decision is pending. The company highlighted the deal's importance for the local electricity and gas market and expressed confidence it will eventually proceed, though terms may change.

The situation now largely depends on the Antitrust Authority's decision. While the authority has delayed its ruling twice, it now has 60 days from the cancellation notice to either approve the deal or specify its conditions. Concerns reportedly center on the deal's long-term nature without a clear exit clause, although Dalia has included a provision allowing for a 30% reduction in gas consumption and the option to purchase from alternative suppliers after 11 years.