Gas tycoons struggle to reach deal that will satisfy regulators

Attempts by the major players in Israel's natural gas sector are expected to dial up attempts to reach a compromise that would allow drilling at the Leviathan natural gas field to proceed after last week's decision by the head of Israel's Antitrust Authority to revoke the permit. As of Saturday night, it was difficult to assess the chances of reaching a framework that would lead to agreements to move the development of the Leviathan offshore gas field forward while also promoting competition.

On Sunday, representatives of the Delek Group, controlling shareholder Yitzhak Tshuva, and other officials were slated to meet with the head of Anti-Trust Authority director Professor David Gilo. No representatives of Noble Energy were expected to participate.

Last week, Gilo decided that the arrangement in the works to leave the Leviathan and Tamar gas fields in the hands of the Delek Group, which is controlled by Tshuva and the American Noble Orange company, was unacceptable and in effect created a gas cartel. Gilo said he was considering declaring the two companies a natural gas cartel, pending a hearing.

"A few proposals were made to the Anti-Trust Authority head last week. There was willingness to be flexible," an official who was present in some of the meetings with Gilo said this weekend.

The official stressed that it was still too early to know how the matter would turn out. One reason for that is because it appears that some of the actors are having a very difficult time with how Israeli regulation works. Some of the partners in the gas fields see local regulation as erratic.

Another source also noted it was too early to see where things were headed. According to this source, as long as the compromise proposals being put together were not acceptable to both partners in Leviathan and Tamar, they were only partial solutions.

Ever since Gilo's announcement, officials involved in the matter at various levels have been reaching out in an attempt to reach a compromise.

Prime Minister Benjamin Netanyahu has instructed the head of the National Economic Council at the Prime Minister's Office Professor Eugene Kandel to take charge of the work and study the ramifications of Gilo's decision. Kandel was instructed to study the issue, but not interfere with the decision. On Saturday night, Kandel's spokeswoman said he was preparing to fulfill the task the prime minister set him.

On Monday, the Knesset is scheduled to discuss the issue, and the debate is expected to be lively. Many MKs are expected to show up, as well as regulators involved in the matter.

Another possible development reported over the weekend, albeit one that appears unlikely for now, is that the Indian company ONGC Videsh is looking at becoming partner in the Leviathan gas field.

A New Delhi news site quoted a senior official in the company saying that "the company would like to cooperate in the Leviathan gas field, and in Israel's economically profitable waters."

According to the official, India has imported oil from Iran, Iraq, Kuwait, and Saudi Arabia, which was why opportunities to work with Israel had not been looked into.

The Leviathan gas field is one of the largest natural gas reserves discovered in the world in recent years. Containing some 19 trillion cubic feet of natural gas, Leviathan is twice the size of the Tamar gas field, which holds an estimated 9 Tcf.

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