Alaco

10.02.2016 | Competition boost for the Israeli energy market

The discovery of a third major gas field in Israel could introduce much-needed competition into the country’s energy sector.

There’s been much debate in Israel about the need for increased competition in the gas sector.  The central issue over the last few years has been whether the Israeli regulator and the government are going to divide up the country’s gas assets between several different companies and ask them to compete with each other over the extraction and sale of gas.

The principal players are Israeli-owned Delek and Texas-based Noble Energy, who control the Tamar field and the much larger Leviathan field.  Other energy companies, attracted by the potential of Israel’s offshore gas sector, would obviously like to see it opened up.  But, not surprisingly, the two main operators have lobbied very heavily against significant reforms of the regulatory framework in order to keep them in pole positions.

But the status quo might change soon.  Although the government has given Noble and Delek the go-ahead to develop the Leviathan field, for competition reasons they will both have to divest part of their stakes in Tamar, which may lead to the entrance of a new operating partner.  Potentially more significantly, in January 2016 another Israeli company, Isramco, discovered a third major field, Daniel, which is almost as big as Tamar.

If Daniel turns out to have commercially exploitable reserves, it might provide a natural path to competition, possibly easing pressure on the government to impose more stringent regulations.  With continued public discontent over the perceived Delek-Noble gas monopoly, an Isramco-operated gas field could just be the solution everyone was looking for.