Is­rael gov­ern­ment ap­proves ma­jor off­shore gas deal

The China Post - - WORLD BUSINESS -

The Is­raeli gov­ern­ment on Sun­day ap­proved a ma­jor deal with a con­sor­tium in­clud­ing U.S. firm Noble Energy on nat­u­ral off­shore gas pro­duc­tion in the Mediter­ranean, the prime min­is­ter’s of­fice said.

The agree­ment, which was an­nounced on Thurs­day and is ex­pected to face a par­lia­men­tary vote, aims to end months of un­cer­tainty and set a frame­work for the ex­ploita­tion of gas dis­cov­er­ies.

It is ex­pected to raise ma­jor new gov­ern­ment rev­enues and could pro­vide Is­rael with strate­gic lever­age in the re­gion if it be­comes a gas ex­porter.

“This money will ben­e­fit ed­u­ca­tion, health, so­cial wel­fare and other na­tional needs,” Prime Min­is­ter Ben­jamin Ne­tanyahu said ahead of the cab­i­net vote, which passed 17-1.

Noble and lo­cally based firm Delek have since 2013 pro­duced gas from the Ta­mar field off the Is­raeli coast.

They have also teamed up to de­velop the off­shore Le­viathan field, con­sid­ered to be the largest in the Mediter­ranean.

The agree­ment stip­u­lates that Delek sells its 31 per­cent share of Ta­mar within six years, and Noble de­crease its hold­ings there from 36 to 25 per­cent to no longer be the largest share­holder.

It also con­tains amend­ments to an ear­lier ver­sion, such as link­ing the price of gas to an energy in­dex, which is meant to lower costs for con­sumers.

The con­sor­tium com­mit­ted to in­vest US$1.5 bil­lion to de­velop the Le­viathan field over the next two years.

Is­rael has agreed not to change fis­cal and reg­u­la­tory rules re­lated to the gas in­dus­try for a decade as long as the con­sor­tium abides by its com­mit­ments.

The talks have been con­tro­ver­sial, with many fear­ing the deal would overly fa­vor the com­pa­nies in­volved.

The agree­ment notes that Is­rael’s an­titrust au­thor­ity ob­jects to it on the grounds that it does not al­low for suf­fi­cient com­pe­ti­tion.

To cir­cum­vent that ob­sta­cle, Ne­tanyahu’s in­ner cab­i­net in June de­clared gas pro­duc­tion to be linked to na­tional se­cu­rity, thus al­low­ing the gov­ern­ment to over­ride laws re­lated to mo­nop­o­lies.

Ne­tanyahu has pushed hard to speed up gas pro­duc­tion in the Mediter­ranean, draw­ing crit­i­cism from po­lit­i­cal op­po­nents who ac­cuse him of not en­sur­ing suf­fi­cient ben­e­fits for the public in the ne­go­ti­a­tions.

“The true in­ter­ests of the state of Is­rael re­quire the ap­proval of this out­line as quickly as pos­si­ble,” he said on Sun­day, while declar­ing he was “not im­pressed by pop­ulism.”

Dov Khenin, a law­maker from the Joint List, was one of the op­po­si­tion mem­bers to speak out against the agree­ment, list­ing a se­ries of rea­sons why it was tan­ta­mount to a “con­ces­sion agree­ment” to Noble and Delek.

Khenin on Thurs­day noted the lack of a mech­a­nism to con­trol gas prices, which would en­able them to rise.

He also said the gov­ern­ment agreed to put off the dead­line to de­vel­op­ing Le­viathan un­til 2020, and pointed out that Is­rael was not in­sist­ing on another pipeline to lead the gas from Ta­mar be­ing in­stalled, as many had hoped would be the case.

AP

Is­rael’s Prime Min­is­ter Ben­jamin Ne­tanyahu ar­rives for the weekly cab­i­net meet­ing at his of­fice, in Jerusalem, Sun­day, Aug. 16.

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