Israel gas stocks slump as regulator reviews Leviathan, Tamar holdings
Israel gas stocks slump as regulator reviews Leviathan, Tamar holdings
YAACOV BENMELEH and SHARON WROBEL
JERUSALEM (Bloomberg) -- Israel’s gas stocks plunged after the antitrust commissioner signaled he may take action that would hurt companies developing the country’s two largest natural gas fields.
Antitrust chief David Gilo said he was reconsidering his March 2014 agreement to let a partnership led by U.S.-based Noble Energy and Israel’s Delek Group retain its stakes in the Leviathan and Tamar reserves if they would sell smaller fields. He said the arrangement may crimp competition and that he was considering declaring the partnership a monopoly, a move that might require it to sell holdings in one of the two big fields.
Gilo’s decision “casts a shadow on the future of the oil and gas industry in Israel,” Binyamin Zomer, Noble Energy Inc.’s head of Israel operations, said in an emailed statement. Delek Drilling-LP said the partnership is studying the implications of the regulator’s announcement.
The Antitrust Authority’s move, meant to be mindful of consumers’ rights, creates new problems for investors concerned about regulatory uncertainty in Israel. Critics have accused Israeli regulators of changing rules mid-game, jeopardizing investment.
The yield on Delek Group’s 8.5% bonds due October 2017 soared 83 basis points to 2.71% at 1:26 p.m. in Tel Aviv. The TA-Oil & Gas Index sank 7.7%, the most since September 2011. Trade in the shares of Delek Group Ltd., Delek Drilling, Avner Oil Exploration LP and Ratio Oil Exploration 1992 LP was suspended for nearly three hours while the partners responded to Gilo’s move.
‘U-Turn’
“This decision is a U-turn and we don’t know where this is heading,” Gideon Tadmor, CEO of Avner Oil, a partner in the gas development, told Israel Radio. “The Israeli government will have to take a position. This is a historic opportunity that must not be missed.”
The larger Leviathan field was discovered off Israel’s Mediterranean coast in 2010, a year after the Tamar site was found. Together, they hold an estimated 29 Tcf of gas.
The new regulatory environment creates uncertainty that can impact development of the larger field, Terence Klingman, head of research at Psagot Investment House Ltd. in Tel Aviv, said by phone.
“This is a disaster for the gas industry, which has a knock-on effect on other gas companies,” Klingman said. “It’s impossible for investors to assess the value of the Leviathan field because of the regulatory uncertainty.”
