The mess created by Israeli government regulators on the local gas market is starting to take its toll on the major players in the field.
Delek Drilling, Avner, and Ratio announced on Wednesday the cancellation of the agreement for the sale of gas to the Palestinian Authority (PPGC – Palestine Power Generation Company).
The agreement was for the sale of up to 4.75 billion cubic meters of natural gas over about 20 years, for an estimated $1.2 billion, 60 percent of which was supposed to go to the state.
The agreement was formulated in early 2014, then the Leviathan offshore rig partnership was going to sell natural gas to a new power plant to be constructed in the Palestinian Authority to supply electricity to residents of the West Bank.
The new power station was supposed to significantly reduce the PA’s dependence on the Israeli electricity network.
At the time, the contract was the first gas export from Israel, with the added advantage of a short pipeline through Israel’s Sharon valley to the PA.
According to the Leviathan partners, the reason for canceling the deal was “non-fulfillment of the prerequisite conditions set forth in the agreement, essentially the denial of an Antitrust Authority approval, delay in approving development of the Leviathan project, and a failure to receive the regulatory approvals required by law.”
However, should the Israeli regulators suddenly wake up during the next 11 days, and issue those approvals, then, who knows, maybe the parties would consider renewing their negotiations.
It’s the Persian bazaar, folks, just like Bibi told the U.S. Congress — you walk away in a huff, you come back, it’s a Middle Eastern thing.
As you may recall, back in December Antitrust Commissioner David Gilo revealed that he was considering declaring Delek and Noble a cartel, due to their cross-holdings in the gas reservoirs of Tamar and Leviathan.
The announcement came as a total surprise for Noble Energy, which retaliated by announcing a freeze on investments in Israel, including the further development of the Leviathan reservoir.
So then a team of Israeli inter-ministerial officials from the ministries of Finance, Energy, the Prime Minister’s Office and the Antitrust Commission, went to work on a compromise with the reservoir owners, thinking they could talk them into coming back.
Remember the Persian bazaar thing? OK, so this time it hasn’t worked. Not with the Antitrust G-man Gilo, who decided to suspend everything until after Passover.
Ah, that’s another Israeli thing — after the holidays.
So now the Israeli gas market is suspended until after the last Matzah is consumed and the last matzah ball soup is cooked, presumably on imported gas.