NewMed Cancels $6.7 Billion Gas Deal With Dalia Power Amid Regulatory Delay
Translated & summarized from Globes by baba
NewMed Energy has canceled a $6.7 billion gas deal with Dalia Energy, citing delays and reservations from the Israel Competition Authority. The move is seen as a negotiation tactic to pressure regulators into approving the agreement.
The story in 5 lines · by baba
- NewMed canceled a $6.7 billion gas deal with Dalia Energy.
- The cancellation is a tactic to pressure the Competition Authority.
- The authority has significant reservations about the deal's terms.
- The deal is crucial for Dalia's new power plants.
- NewMed's new CEO faces his first major challenge.
NewMed Energy, a major stakeholder in Israel's Leviathan gas field, has announced the cancellation of a significant 20-year, $6.7 billion natural gas supply agreement with Dalia Energy.
The deal, originally signed in May, was set to provide gas to two new Dalia power plants, "Dalia 2" and "Abshel," between 2030 and 2050. The cancellation, which occurred just before the Sukkot holiday, surprised the market and Dalia Energy, who legally rejected the termination.
Industry sources suggest the cancellation is a strategic maneuver by NewMed and its partner Ratio (which holds 15% of Leviathan) to pressure the Israel Competition Authority. The authority has been reviewing the deal for months and has expressed significant reservations, potentially leading to unfavorable conditions for the parties involved. These reservations include the long duration of the contract, extending to 2050, and limitations on reselling gas to third parties, which the authority believes hinders the development of a secondary gas market.
NewMed and Dalia are reportedly seeking swift approval of the deal as originally agreed. The Competition Authority, however, has postponed its decision twice, citing the deal's unprecedented scale and potential economic implications. The authority's review is expected to conclude in October, with many anticipating the deal will ultimately proceed due to its strategic importance for both the energy sector and the Israeli economy.
This situation marks the first major challenge for NewMed's new CEO, Niv Serner, who recently replaced Yossi Abu after 15 years in the role.
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