Leviathan Gas Partners Cancel $6.7 Billion Deal With Dalia Energy

Partners in Israel's offshore Leviathan natural gas field have announced the cancellation of a major $6.7 billion deal to supply gas to Israeli power producer Dalia Energy. The cancellation comes just four months after the agreement was signed in May. New-Med Energy and Ratio Energy, which jointly hold approximately 60% of the Leviathan field, informed Dalia of the decision, citing the failure to meet all stipulated conditions for the deal to take effect within the agreed-upon timeframe. New-Med did not specify which condition was unmet.

Market estimates suggest that the Israeli Competition Authority's stance may be behind the dispute. The authority had not approved the deal in its original form due to concerns about market concentration in gas supply for private power generation plants. Dalia Energy has rejected the cancellation notice, considering it invalid, as discussions are reportedly ongoing regarding an exemption request submitted to the Competition Authority.

The original agreement, signed in May, stipulated the supply of natural gas from the Leviathan field to Dalia for nearly 20 years, from 2030 to 2049. Initial annual supply was set at around 1.3 billion cubic meters, increasing later to approximately 1.7 billion cubic meters. The cumulative revenue expected for the supplying companies over the contract period was estimated at $6.7 billion.

Dalia intended to use the gas to power new electricity generation projects, including its "Dalia 2" plant and the "Abshel" project in Ashdod. The current dispute leaves the fate of one of the largest gas deals in the Israeli energy market in recent years unresolved, pending a resolution on the validity of the cancellation and the fulfillment of regulatory conditions.