Expanding Israeli Corruption Probe Batters Natural Gas Shares

A news report that Israeli natural gas agreements will come under the scrutiny of corruption investigators pummeled fuel producers’ shares on Sunday.

Delek Group Ltd., Ratio Oil Exploration 1992 LP and Isramco Negev 2 LP were all sharply down in Tel Aviv after Channel 2 reported on Friday that police will widen their investigation into a submarine purchase deal to look at possible criminal wrongdoing in the gas industry.

Delek, the holding company with stakes in Israel’s two biggest fields, Leviathan and Tamar, fell 5.2 percent to 662.40 shekels at 1:23 p.m. in Tel Aviv, the biggest decline since March. A Delek spokeswoman didn’t immediately reply to a request for comment.

Channel 2 said the probe will broaden based on information given by a state witness in the submarine affair. Israeli media reported last week that current and former officials who worked under Energy Minister Yuval Steinitz have been arrested as part of the investigation. A Steinitz spokeswoman declined to comment.

“Investors are a bit jittery after a television report said that the submarine investigation will spread to the gas industry,” said Noam Pincu, an analyst at Psagot Investment House Ltd.

Scrutiny of the gas contracts could batter the fledgling industry as companies including Delek seek to reach export accords with Egypt and Turkey. The government’s regulatory framework for the sector, approved last year, was criticized by political opponents and activists, in part because it was pushed through over the objections of the antitrust commissioner, on national security grounds.