Israel Antitrust Authority Update: Easing of Gas Exploration Regulations
October 11, 2015
Press Release
Easing of Regulations on Companies Exploring for Natural Gas
“Partnerships in natural gas exploration between companies that do not hold
rights in the Leviathan or Tamar reservoirs should benefit from a more
accommodating regime.”

The Israeli Antitrust Authority will reduce the burden of regulation on
companies that collaborate in the exploration for natural gas, on the
condition that they are not dominant players in the Israeli industry.

This represents a change in policy which up till now placed significant
limitations on these partnerships, particularly the obligation to sell or
reduce the involvement of a partner in the case that gas is discovered in
more than one reservoir in which he has holdings.

The decision reached today regarding the Pelagic and Oz licenses for natural
gas exploration states that “Partnerships in natural gas exploration between
companies that do not hold rights in the Leviathan or Tamar reservoirs
should benefit from a more accommodating regime, so as to maximize the
possibility of discovering a gas reservoir that can compete with the
existing monopoly. Therefore, in general, I do not see any justification in
obligating them to sell the gas reservoirs or to reduce their involvement in
gas reservoirs that they will discover, whether in whole or in part.
Accordingly, the requests submitted for said partnerships will be dealt with
in a timely manner and the exemption to be granted to them is not expected
to have any onerous conditions, if any at all.”

The decision relates in principle also to parties that are active on a more
limited scale in the Leviathan or Tamar reservoirs and those that hold
partnerships with the dominant players in other reservoirs. These cases will
be considered on an individual basis; nonetheless, it is the intention
overall to make it as easy as possible to enter the field of natural gas
exploration, particularly in regard to companies which are not dominant
players in the industry or companies connected to them.

Exemption for restrictive arrangements in the case of the Pelagic and Oz
licenses

This policy was presented as part of the decision to exempt the parties to
these restrictive arrangements from approval of the Antitrust Tribunal.
Following a compromise agreement between the partners, these arrangements
change the composition of ownership of the Pelagic and Oz licenses, such
that Israel Opportunity – Energy Resources Limited Partnership will increase
its share in the two licenses. Its share of the Pelagic licenses will
increase from 10 percent to 16 percent and its share of the Nammax Company
will increase from 42.5 percent to 60 percent. In the Oz license, its share
will increase from 10 percent to 41.5 percent.

In October 2013, the Israeli Antitrust Authority decided to condition the
transfer of 10 percent of the rights in the Oz license to Israel Opportunity
on the limiting of its ability to influence the license in the event of a
gas discovery, whether in the Gal licenses or in the Pelagic or Oz licenses,
which it owns. The current decision states that the increase in the company’s
share will be approved without limiting it in the future.