The
natural gas supply between the Tamar partners, led by
Delek
Group Ltd.
and
Noble
Energy Inc.
, and
Israel
Electric Corporation
(IEC) is in jeopardy, because the
demand by IEC's board of directors for the lowest price on the market, a source
involved in the negotiations told "Globes".
IEC's board of directors, is due to
approve the $17 billion gas contract this week, but is insisting on inserting a
clause equivalent to a most favored nation clause, even though theAntitrust Authoritydirector general David Gilo would
probably void it. An inquiry by "Globes" found that former IEC CEO
Amos Lasker persuaded the utility's board to insist on this clause. The Tamar
partners will reportedly sell gas to IEC at $5.50 per million British Thermal
Units.
When IEC and the Tamar partners signed
letter of intent in January 2010. Lasker persuaded IEC's board to subject its
approval on the insertion of a most favored nation clause in the final
contract, which would obligate the suppliers not to sell gas to other customers
for less than they contracted to sell the gas to IEC.
The Tamar partners are
due to sign a $1 billion gas supply contract with private power producers Dalia Power Energies Ltd.within a few days. IEC is afraid that
the Tamar partners will close deals with private power producers at lower
prices than for IEC, in order to block future power producers. IEC contends
that this would give private power producers an unfair advantage, and result in
the general public effectively subsidizing large power consumers that are
customers of the private power companies.
Most favored nation
clauses are common in international gas contracts between a supplier and an
off-take (anchor) customer. IEC justifiably contends off-take status, because a
contract with it is a prerequisite for the banks to approve the billions of
dollars in financing needed to develop the gas field. Delek Group and Alon
Natural Gas Exploration Ltd. together need $1.1 billion in bank financing for
their share in Tamar's development, and Isramco Ltd. needs several hundred
million dollars.
The Tamar partners oppose including a most
favored nation clause in the IEC contract, on the grounds that it is illegal
and violates antitrust laws. Legal sources believe that Gilo will not attach
great importance to international practice concerning most favored nation
clauses when he examines the legality of such a clause between Israeli
companies.
Noble Energy owns 36% of
Tamar, Delek subsidiaries Avner Oil and Gas LP and Delek Drilling LP each own 15.625%, Isramco owns 28.7%, andDor Alon Energy in
Israel
(1988)
Ltd.
unit Alon Gas owns 4%.