Leviathan Partners Pull Out of $6.7 Billion Gas Deal with Dalia Energy

Israeli power producer Dalia Energy is facing uncertainty over a major planned addition to Israel's electricity generation capacity after its partners, NewMed Energy and Ratio Energies, pulled out of a $6.7 billion natural gas supply agreement.

The deal, signed in May, was intended to provide gas from the Leviathan reservoir to two new power stations: the 850-megawatt Dalia 2 plant at Tel Tzafit and the 850-megawatt Avshal plant at Ashdod. The long-term agreement would have covered gas supplies from 2030 through 2050 at a price of $4.70 per million British thermal units.

However, NewMed and Ratio claimed that conditions precedent were not fulfilled within the deadlines set in the contract, specifically citing the lack of approval from Israel's Competition Authority as a key outstanding condition.

Dalia Energy disputes this termination, stating that discussions with the regulator are still underway over an exemption application submitted by the Leviathan partners. The company believes the cancellation is invalid due to the manner in which it was issued and the fact that the notice did not follow the agreement's procedures.