Natural gas talks ‘on the rocks’ as Noble reps walk out

Energy Minister Yuval Steinitz announced on Tuesday that an all-night meeting with representatives from companies developing Israel’s offshore natural gas fields ended without agreement, and the US negotiators left the country.

He said the talks were “on the rocks,” Channel 2 reported, and that officials from Noble Energy were flying back to the US.

Steinitz said the energy companies “presented demands that we can’t accept,” primarily on the issue of an Israeli guarantee of “regulatory stability.” Any terms reached under the new framework being advanced by Prime Minister Benjamin Netanyahu must not change for at least a decade, the companies said.

Talks also centered on the demand that US-based Noble Energy and Israel’s Delek Group develop as quickly as possible the Leviathan gas field, Israel’s largest, even as they continue producing gas from the already developed Tamar field and sell off their holdings in the Tanin and Karish fields.

Talks will continue, Steinitz said, noting there had been some progress on the issue of developing Leviathan and on an agreed-upon framework for limited price controls.

“Development of the gas reserves is of critical economic and strategic importance to Israel,” Steinitz said.

Israel Radio reported that Kulanu party member MK Rachel Azaria said she would oppose the current gas plan if it doesn’t include direct price controls, a cut in the volume of gas permitted for export, and the laying of a second pipeline to the Tamar field.

Azaria sits on the powerful Knesset Finance Committee, which must approve aspects of the deal.

Kulanu party leader Finance Minister Moshe Kahlon has also said in recent days that he would oppose the deal if it didn’t include more stringent price controls.

“The natural gas roadmap cannot be passed; it will be changed,” Kahlon said in a weekend interview with Channel 2. “Every monopoly has to be broken up. Israel’s citizens deserve more and should enjoy this natural resource.”

Bank of Israel Governor Karnit Flug voiced her support for the deal Sunday, acknowledging it wasn’t perfect but saying the arrangement currently being considered by the government, which may have to pass a Knesset vote before it goes into effect, would be good for the Israeli economy, Reuters reported.

“The outline does not achieve the ideal result, but it does contain many advantages for the economy,” Flug said. “The Bank of Israel supports the main points of the outline and progress toward its implementation.”

Last month, a State Comptroller report found that the June draft of the framework being advanced fails to create competition and adequate regulation in the natural gas market, delaying the development of Israel’s recently discovered offshore reserves.

Critics of the gas deal, which effectively secures the Noble-Delek duopoly for as long as 15 years in exchange for the companies developing the fields, say it amounts to “robbery” of Israel’s natural resources and urge stronger regulation and greater transparency in the agreement.