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Tamar gas dispute resolved, saving Israel Electric NIS 100m.

CM 01/02/2021

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A standoff between partners in the Tamar offshore gas field has been resolved, opening the gas market up to greater competition. An agreement signed between the partners will allow them to sell gas to the Israel Electric Corporation at different prices, resulting in savings of as much as NIS 100 million for IEC.In October, the American multinational energy giant Chevron acquired Noble Energy, an energy exploration company with ownership in numerous sites, including Tamar and Leviathan. Following the massive $4.1 billion acquisition, Chevron owns 25% of Tamar and 40% of Leviathan through Noble Energy.Noble is one of six partners in the Tamar field, which has more than 200 billion cu.m. of natural gas in a reserve about 80 km. west of Haifa. Delek Drilling owns 22%, and four other companies – Isramco, Tamar Petroleum, Dor Gas and Everest Infrastructures – own a combined 53%.IEC has had a contract for purchasing gas from Tamar since 2012, and an agreement with the Leviathan field. But at the time Chevron’s acquisition of Noble was finalized in October, the four other shareholders signed a deal with IEC to provide gas at a cheaper price than had previously been negotiated in their 2012 contract. Chevron was surprised by the deal, and refused to allow the gas to be delivered from the field.While it is normal for partners in a field to sell their share of the fuel separately, Chevron felt at the time like its partners in the field were hurting everyone’s long-term interests. Meanwhile, IEC appealed to the Israel Competition Authority, accusing Chevron of “keeping the Israeli energy market as a hostage” with the goal of “totally suppressing competition in the natural gas market and boosting its own profits.” Without gas from Tamar, IEC would have had to buy gas from the Leviathan field instead for $50 million more over the coming year, it charged.On Sunday, the Israel Competition Authority head Michal Halperin said that all of the partners in the Tamar field had reached an agreement, under which each party will be allowed to sell gas separately, with improved pricing terms within the framework of existing gas supply and purchase agreements. The price will be reopened at the end of June 2021.“Chevron is committed to working in partnership with all stakeholders in Israel to achieve mutually beneficial outcomes,” said Jeff Ewing, managing director of Chevron’s Eastern Mediterranean Business Unit. “The settlement reached between the commercial parties provides a positive outcome for all stakeholders, including the Israeli electricity consumer, and also resolves a complex commercial dispute. Chevron looks forward to working with the Government of Israel to support the country’s strategy to develop its energy.”

The settlement agreement affirms the existing 2012 Tamar-IEC contract and the 2019 Leviathan-IEC contract and resolves all outstanding claims, allowing the parties to focus on growing Israel’s domestic natural gas market in line with the targets set by the Energy Ministry of the State of Israel, Chevron said. Source: Jerusalem Post

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