After year of pedaling, Netanyahu set to push through gas deal
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After year of pedaling, Netanyahu set to push through gas deal

Prime minister expected to evoke never-before-used clause to override antitrust opposition, saying development of gas fields needed to ensure Israel’s security

Raoul Wootliff is the The Times of Israel's political correspondent.

Prime Minister Benjamin Netanyahu leads the weekly government conference, at Prime Minister's Office in Jerusalem, on December 13, 2015. (Photo by Yonatan Sindel/Flash90)
Prime Minister Benjamin Netanyahu leads the weekly government conference, at Prime Minister's Office in Jerusalem, on December 13, 2015. (Photo by Yonatan Sindel/Flash90)

Prime Minister Benjamin Netanyahu is expected to sign Thursday a deal on Israel’s newly found gas fields in the Mediterranean, utilizing a controversial clause allowing him to bypass antitrust authorities.

The move comes after a year of performing political cartwheels to override Knesset and public opposition to the deal, which critics claim will create a monopoly in the gas market and lead to higher prices for Israeli consumers.

Netanyahu, who is also economy minister, is determined to sign the deal despite a Monday vote in the Knesset Economics Committee rejecting Clause 52 of the Restrictive Trade Practices (antitrust) Law which allows the economy minister to bypass the Antitrust Authority if security or foreign policy considerations justify it. The authority had ruled that the consortium developing the Leviathan field may constitute a monopoly.

The agreement will pave the way for work to begin on extracting gas from the massive Leviathan gas field off Israel’s coast, which is thought to contain some 22 trillion cubic feet of gas, and is expected to transform the country into a major exporter of the resource.

Netanyahu has said the move will pump hundreds of billions into Israeli coffers, though activists say the deal with the US-Israeli consortium is too favorable toward business interests.

On Wednesday, Netanyahu told the Knesset that the money would go toward easing conditions for Israel’s poor, days after a report found rampant unaddressed poverty in the country.

Monday’s Knesset Economics Committee vote was non-binding and Netanyahu was expected to invoke the never-before-used clause on security grounds. At the committee meeting he said that natural gas extraction lightens the load on Israel’s existing power plants, which were targeted by missiles during last summer’s war with Hamas, and the revenues would offset the costs of a possible boycott of Israeli goods.

He characterized the issue as key for Israel’s future existence.

Benjamin Netanyahu, center, and Yuval Steinitz, right, at the Knesset Economic Affairs Committee meeting on December 8, 2015. (Knesset Spokesperson)
Benjamin Netanyahu, center, and Yuval Steinitz, right, at the Knesset Economic Affairs Committee meeting on December 8, 2015. (Knesset Spokesperson)

Speaking at meeting of his Likud party’s faction in Jerusalem after the vote, the prime minister said that the proposed deal — which grants Israel’s Delek Group and the American Noble Energy the sole rights to develop the substantial gas holdings — was “good for Israel” and essential for energy security.

Without the plan, Netanyahu said the fields would not be developed, thereby requiring additional drilling platforms at existing sites and leaving the country more vulnerable to attacks. The platforms “pose a risk as targets for missile strikes,” he said.

In addition to security considerations, Netanyahu said the new gas deal would provide additional revenue for the government’s health, security and educational initiatives.

“For these two reasons, the deal is the right thing,” he said, claiming that “all professionals in the field” supported the proposal.

Gas rigs in the Tamar field, off the coast of Israel, in June 2014. (Moshe Shai/FLASH90)
Gas rigs in the Tamar field, off the coast of Israel, in June 2014. (Moshe Shai/FLASH90)

 

Netanyahu was forced to pursue the use of clause 52 after then-antitrust commissioner David Gilo ruled that the Delek-Noble conglomerate that is developing Leviathan may constitute a monopoly, sparking a vociferous national debate on the terms given to the energy companies.

Gilo resigned in May over Netanyahu’s decision to push the current deal through.

Former economy minister Aryeh Deri, not wanting to pay a political price for the gas deal but also not wanting to stand in its way, resigned his post last month, allowing Netanyahu to take over the ministry and sign the deal himself.

Netanyahu previously failed over several attempts to pass a Knesset vote transferring Deri’s “Article 52 authority,” as it is known, to the broader cabinet.

Under the terms of the outline, the Delek Group will sell its holdings in the Tamar gas field, as well as two smaller, as-yet undeveloped fields about 120 kilometers off the Haifa coast called Karish and Tanin, within six years and Noble Energy will gradually reduce its holdings in Tamar to no more than 25 percent within the same time frame. During those six years, prices for natural gas will be regulated.

US company Noble Energy and the Israel-based Delek Group have been producing gas from the Tamar field off the Israeli coast since 2013. They have also teamed up to develop the offshore Leviathan field, believed to be the largest in the Mediterranean until a recent Egyptian find which dwarfed Leviathan.

Melanie Lidman and Tamar Pileggi contributed to this report.

 

 

 

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