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Israel's Competition Authority Approves, NewMed Cancels $6.7 Billion Gas Deal
A major dispute has escalated over a 20-year, $6.7 billion natural gas supply agreement from the Leviathan gas field to two power stations being constructed by Dalia Energies at the Tzafit and Eshkol complexes. NewMed Energy and Ratio Oil Exploration, which jointly control approximately 60% of the Leviathan field, are insisting on canceling the deal, while Dalia Energies maintains that the contract is valid and in effect.
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What happened
- 01NewMed Energy and Ratio seek to cancel a $6.7 billion, 20-year natural gas supply deal with Dalia Energies.
- 02The agreement involves supplying natural gas from the Leviathan gas field to two new Dalia power stations at the Tzafit and Eshkol complexes.
- 03NewMed and Ratio, controlling 60% of the Leviathan field, claim the deal is void because conditions precedent were not met by the September deadline.
- 04The Competition Authority approved the core terms of the agreement on Tuesday, finding no antitrust issues with its duration or take-or-pay mechanism.
- 05The regulator referred the parties back to discuss a clause allowing Dalia to resell up to 15% of its purchased gas.
- 06Dalia Energies rejects the cancellation, declares the contract fully in effect, and plans to take legal action to enforce it.
NewMed and Ratio sent a cancellation notice in late September, claiming that the conditions precedent for the agreement, including regulatory clearance, were not met by the stipulated deadline. According to Calcalist, NewMed argues that an unresolved condition regarding Dalia's right to resell up to 15% of the purchased gas to third parties remains outstanding, which they use as grounds to declare the agreement null and void.
Conversely, Dalia Energies argues that the cancellation is invalid because the Competition Authority approved the deal on Tuesday. While the regulator initially raised concerns about the contract's long duration and resale provisions, it ultimately approved the core terms. The authority did, however, refer the parties back to discuss the secondary gas trading clause. Dalia Energies has announced its intention to enforce the contract, which could lead to a major legal battle.
Summarized by baba from the reports of 3 newsrooms. Updated
Latest report: Bizportal. Read Bizportal’s originalThe coverage
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