The regulators have presented their latest compromise proposal for arranging the structure of the natural gas industry to Delek Group Ltd. (TASE: DLEKG) and Noble Energy Inc. (NYSE: NBL). As reported in "Globes" a week ago, the current plan makes no structural change in the Leviathan reservoir, and the partners will not be required to compete with each other in the sale of gas from it (no separate marketing). Instead, the price of natural gas in future contracts will be loosely controlled, at least until competition is generated. In the Tamar reservoir, the compromise requires Delek to sell its holdings within six years,, and Noble Energy to dilute its holdings from 36% to 25%. Both Delek and Noble Energy will also have to sell all their holdings in the Karish and Tanin reservoirs.
Absent from the meeting was Antitrust Authority director general Prof. David Gilo, who is adhering to his view that the current formula will not generate real competition in the gas sector. Other Antitrust Authority representatives were also absent from the meeting.
The next stage is to wait until the incoming government is finalized, and the new Minister of National Infrastructure, Energy, and Water Resources, Minister of Finance, and Minister of the Economy take up their positions and are presented with the plan devised by the professional echelon, headed by National Economic Council chairman Eugene Kandel.
Gilo will also present his views to the political echelon, and only then will it be decided whether to declare that the Leviathan agreement is in restraint of trade. Should they decide to do so, the regulators have a number of ways they can use to bypass Gilo. One is Section 52 of the Restrictive Trade Practices Law, which authorizes the Minister of the Economy, after consultation with the Knesset Economics Committee, to grant an exemption for a restrictive practice, if he believes that this is required for reasons of foreign policy or national security.
Another way is through a national projects bill for energy, transportation, infrastructure, and housing currently being promoted by Prime Minister Benjamin Netanyahu designed to bypass bureaucratic roadblocks.
Published by Globes [online], Israel business news - www.globes-online.com - on May 12, 2015
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