Israeli Power Producer Launches Arbitration vs Chevron's Leviathan Partners

SUBSCRIBE SEARCH ARTICLES NEWS Dalia Energies has sought arbitration in London over a 20-year natural gas supply agreement terminated by NewMed Energy and Ratio Energies, Chevron's local partners in the offshore Leviathan field. Image by eldadcarin via iStock

Israeli electricity producer Dalia Energies Ltd has sought arbitration in London over a natural gas supply agreement terminated by NewMed Energy LP and Ratio Energies LP, Chevron Corp's local partners in the offshore Leviathan field.

The planned 20-year supply, which excludes the United States energy giant, involves sales of up to about 1.3 billion cubic meters (approximately 46 billion cubic feet) a year of Leviathan gas initially, beginning in 2030. The sellers expected around $6.7 billion in total revenue, of which approximately $5 billion would be for NewMed Energy, according to a stock filing by the Delek Group subsidiary on May 20.

NewMed Energy announced September 25 it had ended the agreement, along with Ratio Energies, because conditions had not been met by the agreed deadline. Dalia said in its own filing at the time it believed the agreement was terminated because regulatory approval had not yet been obtained.

Dalia has now escalated the dispute to the London Court of International Arbitration. Dalia seeks "a declaratory ruling that the purported termination notice was issued contrary to the agreement and/or in breach of the agreement and/or in violation of applicable law, and is therefore null and void and without any legal effect", it said in a disclosure with the Tel Aviv Stock Exchange, as translated from Hebrew.

Dalia argues Israel's Competition Authority later cleared the agreement within the agreed timeframe and that the agreement has taken effect on the agreed terms.

"The Partnership [NewMed Energy] and Ratio reject Dalia's claims, and their position is that the notice of termination was given lawfully and that the agreement is terminated", NewMed Energy said in a filing in response to the escalation.

Dalia added it may pursue other remedies available under the agreement or applicable law.

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The gas supply, meant for two domestic power plants yet to be built, was to increase to about 1.7 Bcm per annum from 2034 or 2035.

Each of the two combined-cycle gas turbine projects, which will rise in Ashdod and Tzafit, has a capacity of about 850 megawatts.

Leviathan, discovered 2010 off the coast of Haifa, started production December 2019 under Phase 1A. Leviathan gas is piped to the domestic market, Egypt and Jordan. The field sold 10.8 Bcm in 2025, according to NewMed Energy's annual report.

Early in 2026 the Chevron-led consortium made a $2.36-billion final investment decision to proceed with Phase 1B.

Expected to start operation in the second half of 2029, the first stage of the Phase 1B project aims to grow capacity to about 21 Bcm a year, NewMed Energy said January 16. It said August 21, 2025 Israel's Energy and Infrastructures Ministry had approved Phase 1B.

On July 8, 2026 NewMed Energy said Leviathan's transmission capacity has increased after the laying of a subsea pipeline in the offshore transmission section between Ashdod and Ashkelon.

"Upon completion of the Combined Section Project, the transmission capacity in the EMG pipeline increased from approx. 6.5 Bcm per year to approx. 8.5 Bcm per year, out of which the export capacity of the Levithan reservoir totals approx. 6.5 Bcm per year, in addition to the current export capacity of the reservoir to Egypt of approx. 2 Bcm per year via the Jordan North export pipeline", NewMed Energy said at the time.

On March 2, 2026 NewMed Energy said the co-venturers had completed the construction of a third pipeline from Leviathan to the field's production platform, as well as upgraded the platform. The project has raised Leviathan's gas production capacity to about 14 Bcm a year, according to NewMed Energy.

Chevron operates Leviathan with a 39.66 percent stake through Chevron Mediterranean Ltd. NewMed Energy owns 45.34 percent. Ratio Energies holds 15 percent.

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