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Jordan said to suspend talks with Israel over huge gas deal

After regulator’s decision to dismantle Noble, Delek ‘monopoly,’ Amman reportedly puts $15b. arrangement on hold

Workers on the Israeli 'Tamar' gas processing rig, 24 km off the Israeli southern coast of Ashkelon. (Moshe Shai/FLASH90)
Workers on the Israeli 'Tamar' gas processing rig, 24 km off the Israeli southern coast of Ashkelon. (Moshe Shai/FLASH90)

Jordan said it was suspending talks with Israel over a proposed $15 billion deal for natural gas, Jordanian media reported Sunday, over a week after Israel barred a multinational consortium from developing offshore gas fields.

The cutting off of talks for the massive deal, the largest since Israel began developing the offshore fields expected to turn the country into a regional energy powerhouse, could herald what analysts say are likely jitters over doing business with Israel after its Anti-Trust Authority’s move to put the kibosh on the leasing arrangement.

The Jordanian paper al-Ghad reported that Amman cut off the talks after Israel’s anti-trust regulator said in late December that a partnership between the US-based Noble Energy and Israel’s Delek Group constituted a cartel and would have to be broken apart or sell off certain holdings.

The decision means that the deal between Israel and Jordan could be delayed and would have to be significantly amended.

In early September, Israel signed a memorandum of understanding with Jordan to supply the Hashemite Kingdom with $15 billion worth of natural gas from its Leviathan energy field over 15 years.

Amman and Jerusalem have been engaged in talks throughout 2014 over the gas pipeline, a move that has sparked an angry backlash in Jordan, with many politicians rejecting the agreement for political reasons.

The Antitrust Authority’s December decision ruled that Noble and Delek would have to break apart the consortium or sell their shares in either the Leviathan or Tamar fields — Israel’s two largest offshore natural gas reserves.

The move by the regulator came days after an Italian report found that the consortium responsible for the Tamar gas field was making “monopolistic contractual demands” on Israel, which would lead to a steep rise in electricity costs for Israelis.

News of the announcement caused Delek’s shares to plummet on the Tel Aviv stock exchange, and Noble’s Israel director warned that the decision would “cast a shadow over future gas and oil development in Israel.

Leviathan, which boasts an estimated 16-18 trillion cubic feet of gas, was discovered in 2010 some 130 kilometers (81 miles) west of Haifa. It was expected to become operational in 2016, but the Antitrust Authority’s decision could push that back several years.

Israel began pumping natural gas in March 2013 from the Tamar deposit — discovered in 2009 and located some 90 kilometers (56 miles) west of Haifa — which holds an estimated 8.5 trillion cubic feet of natural gas.

Israel decided last year to export 40% of the country’s offshore gas finds, and has since signed a 20-year, $1.2 billion deal with a Palestinian firm, and in June signed a letter of intent to supply energy to an Egyptian facility as well.

The finds were expected to transform Israel from an energy importer to a major world player in the gas market.

Lazar Berman and David Shamah contributed to this report.

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