Leviathan Partners Says Palestine Power May Cancel Gas DealShoshanna Solomon
Palestine Power Generation Co. may cancel a deal to buy gas from Israel’s largest offshore field due to regulatory and development delays, the partners in the Leviathan field said in a filing today.
The Palestinian provider informed the partners, including Houston, Texas-based Noble Energy Inc. and the oil and gas exploring units of Israel’s Delek Group Ltd., that it would cancel the deal within 30 days unless the issues are resolved. The 20-year accord, signed in January last year, was for the sale of as much as 4.75 billion cubic meters of gas for a plant Palestine Power plans to build in the northern West Bank city of Jenin.
“It is a small contract for the partners in the field but it has a geopolitical importance, as it could have helped strengthen the ties between Israel and the Palestinian Authority and improve Palestinian infrastructure,” Noam Pincu, an analyst at Psagot Investment House Ltd. said Wednesday by phone. “I still think it will go ahead once the regulatory issue is resolved.”
Leviathan and the smaller Tamar offshore site together hold an estimated 32 trillion cubic feet of gas, according to Noble data, enough to supply Israel’s domestic needs for decades and leave enough for exports. Noble and Delek have signed letters of intent to sell gas to clients in Egypt and Jordan. Development of Leviathan, 2010’s largest natural gas discovery, has stalled after Israel’s Antitrust Commissioner David Gilo said in December that he is considering designating the partnership between Delek Group and Noble a cartel.
Shares of Delek Group rose 0.3 percent to 958.50 shekels at the close of trading in Tel Aviv. Its oil exploring units, Delek Drilling-LP and Avner Oil Exploration LLP were little changed.
“It is more a declarative act, whose influence is mainly political,” Ella Fried, a senior analyst at Bank Leumi Le-Israel Ltd. in Tel Aviv, said in a text message on Wednesday. “We don’t think this will impact any other non-binding agreements that have been signed with customers in Egypt and Jordan.”