Leviathan Partners and Dalia Energy Advance $6.7 Billion Gas Deal
NewMed Energy and Ratio Energies have finalized a massive $6.7 billion gas supply deal with Dalia Energy after the Israel Competition Authority removed its regulatory objections.
The massive $6.7 billion natural gas deal signed between the Leviathan partners NewMed Energy and Ratio Energies, and the new power plants of Dalia Energy, is set to move forward after the Israel Competition Authority removed its objections. The gas supply agreement, required for the construction of the "Dalia 2" power plant in the Tzafit compound and the "Avshal" plant in the Eshkol compound, will supply gas at a relatively attractive price of $4.7 per thermal unit for 20 years to both power plants. Following delays in the competition authority's approval, NewMed had declared the cancellation of the deal, though Dalia refused to recognize the cancellation.
Regulatory Approvals and Adjustments
Initially, the Competition Authority raised several concerns, primarily regarding the long duration of the contract—between 2030 and 2050—and the lack of an explicit exit clause. Instead, Dalia will have the right to renegotiate the price in 2041, with the price fluctuating by up to 10% in either direction. If Dalia remains unsatisfied with the price, it can reduce its consumption by 30% and source the remainder from another gas field. All gas will be supplied under a standard "take-or-pay" mechanism. The Competition Authority fully approved these provisions.
Another contentious issue involved third-party sales, permitting Dalia to resell up to 15% of the gas it acquires if it experiences excess supply. The Competition Authority allowed the parties to perform a self-assessment for a block exemption, preserving its right to intervene later if deemed necessary.
Economic Significance and Market Precedent
According to the Competition Authority, the deal holds substantial macroeconomic benefits. Most notably, it represents a precedent-setting separate sale. Until now, gas partnerships engaged in joint sales that left minimal room for competition. In this transaction, field operator Chevron holds 40% and remains outside the deal, while partners NewMed (45%) and Ratio (15%) signed independently. Furthermore, the attractive pricing is expected to stabilize domestic electricity costs.
"The transaction offers significant macroeconomic benefits and sets a crucial precedent for separate gas sales in the domestic market," noted industry analysts following the accelerated approval.
Although NewMed's cancellation notice was rejected by Dalia, the aggressive maneuver effectively pressured the Competition Authority, which recognized the deal's critical market importance. Following the pressure, the authority fast-tracked its review and fully approved the agreement.
