Israeli Energy Shares Tank on News of Egyptian Natural Gas Find

Energy shares plummeted on the Tel Aviv Stock Exchange on Monday after the Italian energy group Eni said it had discovered the largest known natural gas field in the Mediterranean off Egypt, casting doubt about Israeli gas exports to the country.

On top of that, renewed slump on Asian and European market weighed on the TASE.

The stock exchange’s Oil and Gas index was down 7.6% to 1,010.13 points in late morning trading, with Avner down 11.5% at 2.39 shekels (61 cents), Delek Drilling off 11.4% to 12.54 and Ratio, down 14.8% to 29 agrorot, all in very heavy trading.

All three companies are partners in the giant but as yet undeveloped Leviathan has field. They have been negotiating long-term contracts to sell gas to customers in Egypt, but the deals have been held up by the policy debate in Israel over how the industry should be regulated.

Eni said on Sunday it had discovered the largest known gas field in the Mediterranean off the Egyptian coast, predicting the find could help meet Egypt’s gas needs for decades to come. The Italian major said in a statement the offshore Zohr field could hold 30 trillion cubic feet of gas.

“The big fear that this giant gas find will close the door to any option of exporting Israeli gas and will lead to a long delay in developing the Leviathan and even it’s not being developed at all,” said Liran Lublin, energy analyst at Israel Brokerage & Investments.

The news of the Eni discovery comes as the government is due to present a revised framework agreement for the gas industry to the Knesset this week, a process that has been delayed for months over policy disagreements. On Sunday, Energy Minster Yuval Steinetz said the delays were costing the Israeli economy heavily.

Israeli shares were also weighed down by world markets, which began sinking again on Sunday after last week’s stormy trading.

The TASE’s benchmark TA-25 index was down 1.2% to 1,585.98 and the TA-100 was off 1.3% at 1,390.01.

European shares fell on Monday, with Germany’s DAX and France’s CAC on track for their worst month in four years, plagued by sliding Chinese stocks and the threat of a U.S. rate increase as early as next month.

At 0706 GMT, the DAX, the CAC and the euro zone’s Euro STOXX 50 were down 0.5 to 0.6%. UK markets closed for a public holiday. Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan shed more than 1%. U.S. stock futures slid 1%, suggesting weakness on Wall Street later in the session.

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