Israel's Competition Authority Approves Landmark $6.7 Billion Gas Deal
Translated & summarized from Globes by baba
Israel's Competition Authority has approved a $6.7 billion gas supply deal between NewMed Energy, Ratio, and Dalia Energies after initially raising concerns. The deal is seen as economically beneficial for Israel, setting a precedent for independent gas sales and aiming to keep energy prices low.
The story in 5 lines · by baba
- Israel's Competition Authority approved a $6.7 billion gas deal.
- The deal involves NewMed Energy, Ratio, and Dalia Energies.
- Concerns about duration and resale were ultimately resolved.
- The agreement is seen as economically beneficial for Israel.
- It sets a precedent for independent gas sales.
Israel's Competition Authority has cleared a significant $6.7 billion gas supply deal between Leviathan partners NewMed Energy and Ratio, and the Dalia Energies power stations. The agreement, crucial for the construction of two new power plants, "Dalia 2" and "Avshal," will supply gas at a relatively attractive price of $4.7 per thermal unit for 20 years.
Initially, the Competition Authority had raised concerns regarding the deal's long duration (2030-2050) without an exit clause, and the provision allowing Dalia to resell up to 15% of the gas it purchases. However, the authority ultimately approved these terms, allowing Dalia to renegotiate prices in 2041 with a potential 10% fluctuation and to reduce consumption by 30% if unsatisfied, sourcing the remainder elsewhere. The resale clause was approved with the caveat that the authority could intervene later if necessary.
The authority views the deal as highly beneficial for the Israeli economy. It sets a precedent for separate gas sales, as operator Chevron (40%) is excluded, with NewMed (45%) and Ratio (15%) negotiating independently. This is a departure from previous joint deals that limited competition. The attractive pricing is expected to keep local gas prices low, preventing electricity cost increases.
NewMed had previously threatened to cancel the deal due to delays in regulatory approval, a move Dalia contested. This pressure, however, appears to have spurred the Competition Authority to expedite its review. Despite initial intentions for a more extensive review, the authority completed its assessment within two weeks, ultimately approving the deal in full, recognizing its significant economic importance.
