Netanyahu Win Spurs Energy Stock Gains as Leviathan Revival SeenShoshanna Solomon and Yaacov Benmeleh
Prime Minister Benjamin Netanyahu’s re-election on Tuesday was just the push Jerry Cutiesteanu needed to buy shares in Israeli gas companies.
After selling holdings in Delek Group Ltd. and its oil exploring units Delek Drilling LP and Avner Oil Exploration LP in the past three months, the senior investment manager at Tel Aviv-based Israel Brokerage & Investments Ltd. judged it was time to change tack. His bet is that Netanyahu’s continuation in office will clear the way to develop the giant Leviathan field, which has been stalled since December amid a regulatory dispute with the companies.
“One of the first things Netanyahu’s new government will do is to make sure development of Leviathan will go ahead,” Cutiesteanu, who oversees 17 billion shekels ($4.2 billion), said in a phone interview Wednesday. “Netanyahu understands that this is a national project of utmost importance, which will generate jobs, help exports and develop geopolitical ties.”
The Tel Aviv Oil & Gas Index jumped 7.6 percent Wednesday, the most on record, ending a seven-day losing streak that was the longest in more than three years. The gains were fueled partly by an agreement by the partners in Tamar, the country’s second-largest offshore natural gas field, with Egypt’s Dolphinus Holdings Ltd. announced Wednesday. It’s Tamar’s biggest binding export agreement since the field started supplying the local market two years ago.
Netanyahu’s Likud party captured 30 seats in the 120-member parliament, six more than the opposition Zionist Union and 12 more than Likud currently controls, according to final results published by the central elections committee on Thursday. The prime minister intends to build his coalition government within three weeks, Likud said in a statement.
“A stable regulatory environment will lead to billions of dollars of investments in the oil and gas industry by the Leviathan and Tamar partners,” Yossi Abu, the Herzliya Pituach, Israel-based chief executive officer of Delek Drilling, a partner in Tamar and Leviathan, said in a phone interview on Wednesday. “It will also lead to additional strategic regional cooperation with Egypt and Jordan.”
Development of Leviathan, 2010’s largest deep water natural gas discovery, stalled after Israel’s Antitrust Commissioner David Gilo said in December that he is considering designating the Leviathan partnership between Delek Group and Houston-based Noble Energy Inc. a cartel, a move that may require them to sell one of the fields. Netanyahu appointed a committee that month to set policy for Israel’s natural gas market following the antitrust announcement.
Cutiesteanu, who sold shares of oil and gas explorers when the election was called and the regulatory environment became murky, said he bought stock in Delek Group, Delek Drilling, Avner, also a partner in both Tamar and Leviathan, and Ratio Oil Exploration 1992 LP. The parties could reach an agreed framework in a few months, which could further boost shares, he said.
Delek Group advanced 5.9 percent on Wednesday. Ratio, a partner in Leviathan, climbed 12 percent, the most since October 2011. Delek Drilling added 8.9 percent, the steepest gain in more than three years, and Avner rose 8.2 percent, the most since June 2010.
Even after the advance, the TA Oil and Gas Index was trading, through Wednesday, 27 percent below its record high of 1,388.44 reached on May 20. That’s mainly due to lingering regulatory concerns, Cutiesteanu said. The gauge rose 0.4 percent at the close in Tel Aviv on Thursday.
Amit Rozentwige, a senior investment manager at Ramat Gan, Israel-based Halman-Aldubi Group, which manages 15 billion shekels in assets, is holding the shares he owns in the Leviathan and Tamar partners but isn’t buying more.
“I am waiting for more certainty,” he said Wednesday by telephone. “There are still regulatory hurdles that need to be solved, but there is no doubt that Netanyahu’s victory is bringing us closer to a conclusion of the talks between the state and the companies.”
Leviathan and the smaller Tamar site together hold an estimated 32 trillion cubic feet of gas, according to data from Noble, enough to supply Israel’s domestic needs for several decades as well as export to neighbors including Egypt, Jordan and Turkey. The Tamar field started production in March 2013. Noble and Delek have signed letters of intent to sell gas to clients in Egypt and Jordan.