Israeli oil and gas exploration partnership NewMed Energy (TASE: NWMD), the biggest partner in the Leviathan natural gas reservoir, is being required to pay additional tax of $198 million for the tax years 2019 and 2020, after the Israel Tax Authority found that the partnership’s taxable income was hundreds of millions of dollars higher than it reported.
NewMed Energy (formerly Delek Drilling) is a limited partnership that was founded in 1993 under an agreement between Delek Drilling Management (1993) Ltd as a general partner and Delek Drilling Trusts Ltd as a limited partner, for the purposes of carrying out oil and gas exploration and production in Israel. The partnerships participation units are traded at NIS 18.45, giving it a market cap of NIS 21 billion, after a 530% rise in the past five years.
In its notification to the Tel Aviv Stock Exchange, NewMed Energy stated that on the last day of 2025 it had received tax assessments from the Israel Tax Authority for 2019 and 2020 “against a background of disputes that had arisen between the partnership and the Tax Authority and disagreements over the amount of the partnership’s income for tax purposes in 2019 and 2020.”
In its assessments, the Tax Authority determined that the income liable to tax from the partnership’s business in 2019 was $406 million, instead of the $170 million reported in its tax return, while its capital gains were $11 million, as declared.
The income liable to tax in 2020 was determined to be $370 million, instead of the $87 million in the partnership’s tax return.
A question of interpretation
The main dispute relating to the 2019 tax year is over the interpretation of the way in which financing and other expenses should be recognized. For 2020, the dispute is over that and over the timing of the recognition of expenditure on development of the Leviathan reservoir.
If the Tax Authority’s claims are accepted, the partnership will have to pay taxes (plus interest and index-linkage) at the expense of its unit holders amounting to $90 million for 2019 and $108 million for 2020.
The partnership stated that it disagreed with the Tax Authority’s stance, and that discussions were taking place not just about 2019-2020 but about previous years as well. “The partnership has adopted a similar interpretation concerning matters in dispute from the 2016 tax year to now. These matters are currently being clarified in legal proceedings between the Tax Authority and the partnership concerning the tax years 2016-2018,” it said in its notification.
According to the partnership, a decision on the matter will not have a dramatic effect on its total tax liability over the years, but rather on the timing of tax payments.
On the basis of an opinion from its professional advisers, NewMed puts the chances of its arguments being accepted at over 50%, and it therefore intends to file an objection to the tax assessments and to exhaust the administrative and legal proceedings available to it.
Published by Globes, Israel business news – en.globes.co.il – on January 1, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.
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