Israel's Competition Authority Approves, NewMed Cancels $6.7 Billion Gas Deal

A dispute is ongoing between NewMed Energy, Ratio, and Dalia over a significant Israeli energy sector deal, despite the Competition Authority removing most of its reservations. In May, NewMed and Ratio, holding about 60% of the Leviathan gas field, agreed to sell gas to Dalia for an estimated $6.7 billion. The deal, set to begin in 2030 and last 20 years, was intended to supply two new power stations Dalia is building. However, in September, the sellers announced the deal's cancellation, citing delays in fulfilling its conditions. Dalia maintains the agreement is still valid, while NewMed insists the cancellation is effective. The Competition Authority's approval, which was a major hurdle, now leaves the core issue as a legal question of whether NewMed and Ratio had the right to cancel the contract in September. The deal's value was estimated at $6.7 billion, with initial annual supply of 1.3 billion cubic meters (BCM), rising to 1.7 BCM. The gas was earmarked for Dalia's two new power projects, estimated to cost 10 billion shekels and add 1,700 megawatts of capacity. The Competition Authority's initial concerns included the long contract duration, a 'take or pay' clause requiring Dalia to pay for a minimum amount of gas, and Dalia's ability to resell up to 15% of the gas. While the authority accepted the deal's structure, it reserved the right to revisit the resale aspect. The dispute's economic dimension involves potential higher prices in the export market, particularly to Egypt, which has seen increased export capacity from Leviathan. Dalia faces a practical challenge in securing stable gas supply for its new, costly power stations. The conflict could be resolved through a new agreement between the parties or a court ruling on the validity of the cancellation notice.