Pressure pays off: Regulator approves giant Leviathan gas deal

The Competition Authority approved a $6.7 billion gas supply deal between Leviathan partners NewMed Energy and Ratio Energies and Dalia Energy, after NewMed canceled the agreement to pressure the regulator. The deal supplies gas at $4.7 per MMBtu for twenty years, supporting two new power stations and setting a precedent for separate sales, with benefits for the economy and electricity prices.

The Competition Authority approved the $6.7 billion gas supply deal between the partners in the Leviathan offshore gas reservoir, NewMed Energy and Ratio Energies, and Dalia Energy Companies. The deal is required for the construction of two new gas-fired power stations: Dalia 2, an 850-megawatt plant at Tel Tzafit, and the Avshal plant at the Eshkol power station site in Ashdod, also with 850-megawatt capacity. Gas will be supplied at $4.7 per MMBtu for twenty years. NewMed had announced the cancellation of the deal due to delays in regulatory approval, but Dalia Energy refused to recognize the cancellation. The Competition Authority originally had concerns about the deal's duration, lack of an exit clause, and third-party sales, but approved all clauses. The Authority views the agreement as having significant benefits for the economy, including setting a precedent for separate sales—the operator Chevron (40%) is excluded, while NewMed (45%) and Ratio (15%) signed separately. The price is considered attractive and will keep electricity prices low. NewMed's cancellation threat put pressure on the Authority, which completed its review within two weeks, including the Sukkot holiday.