Israeli Business Daily: Palestinian Power Co. Cancels $1.2b Leviathan Gas Deal

RAMALLAH, March 11, 2015 (WAFA) – The Palestine Power Generation Co. (PPGC) has cancelled a 20-year gas supply contract worth $1.2 billion, signed in January 2014 with the joint American-Israeli Leviathan Energy LLC, the Israeli business daily Globes uncovered on Wednesday.

Globes said the termination of the deal, which was to supply a yet to be established power generating station in Jenin with gas for 20 years, was due to the delays caused by the Israel Antitrust Authority.

Leviathan partners Avner Oil and Gas LP, Delek Drilling Limited Partnership and Ratio Oil Exploration LP reported this morning that PPGC has cancelled its $1.2 billion contract to buy gas from Leviathan. PPGC did not issue any official statement on the matter yet.

In January 2014, PPGC signed an agreement to buy 4.75 billion cubic meters of gas to generate electricity from a power plant which was to be built in the Jenin area. The plant was expected to be ready in two years.

The Leviathan partners, according to the Globes, explicitly stated that the cancellation of the contract was because the Israel Antitrust Authority had failed to grant approvals, delays in approvals for the development of the Leviathan field, and lack of other regulatory approvals.

The contract was signed in January 2014 in the American Colony Hotel in Jerusalem in January 2014 between Minister of the Palestinian Energy Authority Omar Kittaneh, Delek Group controlling shareholder Yitzhak Tshuva and senior company officers, and representatives of Noble Energy and Ratio.

Kittaneh, the head of the Palestinian Energy Authority, said during the signing ceremony that even though the Palestinian government was not party to the contract, yet its role was to guarantee that electricity prices remain low.

The power plant was set to produce 200 Mega Watt of electricity annually, enough to cover the needs of the northern West Bank districts.

Currently, the West Bank districts are being supplied with electricity solely from Israeli power plants.

Last month, the Israel Electric Corporation (IEC), the main supplier of electrical power in Israel and the northern West Bank, cut off the electricity supply to the northern West Bank districts of Nablus and Jenin due to accumulated debts on the Palestinian Authority (PA).