Leviathan Gas Partners Cancel $6.7 Billion Deal With Dalia Energy

Partners in the Leviathan gas field have canceled a $6.7 billion contract to supply gas to Dalia Energy. NewMed Energy, which holds a 45% stake in the field, announced the termination of the deal to the Tel Aviv Stock Exchange, along with partner Ratio Energies, according to Globes. The contract, spanning from 2030 to 2050, was intended to fuel two new 850 MW power plants: "Dalia-2" in Tel Tzafit and "Avshal" at the Eshkol power station in Ashdod. The Eshkol station was formerly part of the Israel Electric Corporation and is the largest privatized power plant.

This deal was significant for the Israeli energy market. In May, NewMed and Ratio had agreed to supply gas from Leviathan for 20 years, with the total contract value estimated at approximately $6.7 billion. The gas price was set at $4.7 per MMBtu (million British thermal units).

The suppliers stated that preliminary conditions for the deal were not met, specifically citing the approval of financing and an agreement with the Israel Competition Authority. Dalia Energy, however, disputes the cancellation, calling the notice unexpected and legally invalid, asserting that the termination procedure did not comply with the contract terms. The company also indicated that negotiations with the Competition Authority are ongoing, as suppliers have applied for an exemption and the authority has not yet finalized its position.

Globes reports that Dalia Energy does not face financing issues, raising questions about the partners' motives for canceling the deal. The publication suggests the cancellation notice might be a negotiation tactic. The original agreement included a price review in 2041, allowing for a maximum 10% adjustment in either direction. While the contract is crucial for Israel's electricity sector and domestic gas market, its future remains uncertain, with the possibility of a revised agreement emerging.