A fateful debate involving complicated legal issues and huge business interests is taking place in the government. Many of Israel’s biggest companies are involved, as are many of the country’s top lawyers.
It’s all dedicated to a decision to be made in the next several weeks on whether to take steps against the natural gas cartel. At stake is not only the cost of living for ordinary Israelis but the ability of regulators to exercise control over the country’s natural gas industry. There’s also a business angle to the debate because energy contracts worth billions of dollars over the next 15-30 years hang in the balance.
The origin of the dispute is a complaint with Israel’s antitrust commission filed on November 20 by the four minority partners in the Tamar natural gas field against the senior partners – Israel’s Delek Group and Noble Energy of Texas.
The four – Isramco, Dor Energy, Everest (Harel Insurance) and Tamar Petroleum – accuse Delek and Noble of abusing their cross-holdings in both Tamar and the much bigger Leviathan field to undermine competition between the two.
The two companies are alleged to have created a price cartel at the expense of the minority partners in Tamar, when the two fields were bidding for an important contract with state-owned Israel Electric Corporation last year.
In their complaint, they say they wanted to offer terms to IEC that would have saved the company $70 million over two years. But, the four allege, Delek and Noble vetoed the proposal.
The four claim that Delek and Noble, which together control 47% of Tamar versus 85% of Leviathan, have a greater interest in selling Leviathan gas over Tamar gas because they will earn a greater share of the profits. A newer gas reservoir that only began production in the last three weeks, Leviathan has fewer customers.
