Cabinet approves gas export plan by wide margin

Foreign sale okayed of 40% of natural gas find; PM claims opponents don’t understand how to run economies; critics say Knesset must debate issue

Prime Minister Benjamin Netanyahu leads a weekly cabinet meeting in Jerusalem (photo credit: Marc Israel Sellem/Pool/Flash90)
Prime Minister Benjamin Netanyahu leads a weekly cabinet meeting in Jerusalem (photo credit: Marc Israel Sellem/Pool/Flash90)

Despite vocal opposition from MKs on both sides of the aisle, the cabinet on Sunday approved Prime Minister Benjamin Netanyahu’s proposal to allocate 60 percent of Israel’s natural gas for domestic consumption and 40 percent for export.

According to Israel Radio, only three cabinet ministers dissented: Health Minister Yael German (Yesh Atid), Environmental Protection Minister Amir Peretz (Hatnua) and Home Front Defense Minister Gilad Erdan (Likud).

Under this plan, Israel’s economy would receive 540 billion cubic meters of natural gas.  Based on Israel’s 2012 natural gas consumption of 7 billion cubic meters, this allotment would last for at least 25 years even with significant increases in domestic use.

The government faced criticism from activists concerned that too much of the gas was being exported, and some Knesset members complained that a decision with macroeconomic consequences valued at hundreds of billions of shekels was being make without input or involvement of parliament.

In a rare act of cross-aisle cooperation, opposition leader Shelly Yachimovich (Labor Party) and MK Reuven Rivlin (Likud) announced Sunday that they would petition the Supreme Court to force a full discussion of the natural gas plan on the Knesset floor.

“In the past,” Rivlin said, “the natural gas issue was brought before the Knesset, and we should not deviate from this principle.”

He added that since Israel’s natural gas policies influence Israel’s economic strength, and the welfare of future generations, there must be a public debate on the final legislation.

An aerial view of an Israeli offshore gas rig. (photo credit: Albatross Aerial photography/Noble Energy/Flash90)
An aerial view of an Israeli offshore gas rig. (photo credit: Albatross Aerial photography/Noble Energy/Flash90)

Critics also organized protests against the decision, with hundreds marching in Jerusalem on Saturday evening and several dozen outside the Prime Minister’s Office on Sunday. Eight activists were briefly held by police for violence during the demonstrations.

Netanyahu dismissed the criticism at the cabinet meeting Sunday, saying the critics “don’t understand how to run economies.”

The export of natural gas was crucial to enable further investment in Israel’s energy sector, he said.

“For decades, governments went looking for gas. They failed. Those who succeeded came from the private sector; they went and looked and found. Despite this wave of populism, we have to give them their credit and their due. And we have to make sure the government takes its part. We’ve found the right balance,” Netanyahu said.

“If we don’t export gas, there won’t be a local gas market. That mistake, that populist impulse – ‘let’s keep the gas for ourselves’ –- was committed by many states that kept the gas for themselves. It’s buried underground or underwater, under layers of populism and ‘democracy,’” Netanyahu charged.

According to the Israeli business journal Calcalist, the government has sought to rush through approval of the export decision in order to allow energy companies to sign export agreements and begin laying the infrastructure for export.

On Friday, the government of Cyprus announced it would sign a memorandum of understanding Wednesday with Noble Energy, Delek Drilling and Avner Oil Exploration to construct a natural gas terminal in the industrial zone of Vassilikos on Cyprus’s southern coast.

“This is a great day for the State of Israel,” Finance Minister Yair Lapid said in a statement Sunday, calling the decision “measured and correct.”

“We increased the gas meant for local consumption [to 60% of the gas extracted], but at the same time we allowed export that will bring additional investors, inject $60 billion to the state over the next two decades, lower the cost of living and bring growth to the Israeli economy.”

Despite the praise of some ministers, the decision continues to be controversial. A coalition of MKs and activists from across the political spectrum are continuing to criticize what they called the government’s rush to finalize the decision. Some, including Labor’s Yachimovich and Avishay Braverman, have threatened to turn to the High Court of Justice to appeal the decision.

On Thursday, Yachimovich said the decision would benefit Israel’s gas tycoons to the tune of NIS 350 billion (some $100 billion) in profits while denying the public the benefits of long-term energy independence.

Yachimovich told Israel Radio that the decision was made “without any form of legislative process and without the public knowing what was happening,” and called it “underhanded opportunism under the darkness of night.”

She said exporting the estimated 540 billion cubic meters of gas would mean profits of NIS 350 billion for local and international gas giants, including the heads of Noble Energy, Delek Drilling, Avner Oil & Gas Exploration, and Isramco.

“You wouldn’t see a decision on a trillion shekels [overall] taken in Europe or the US without passing through the parliament,” Braverman, a noted economist and chair of the Knesset Economics Committee, charged on Sunday.

He told Israel Radio that he understood the rush to enable Israel to remain at the forefront of development deals in the region. But, he said, raising the issue in the Knesset “would allow the public to understand local demand and needs. Without it there is no legitimacy to the decision. I’ve met representatives of the major [energy] companies. Nobody will run away from this program if it’s delayed by three weeks or a month.”

Tourism Minister Uzi Landau, a former minister of energy and infrastructure, joined in the chorus of critics of the government’s alleged sidelining of the Knesset, calling the decision-making process “anti-democratic.”

“Why do we elect a Knesset? To take the principled decisions. A debate in the Knesset is a more public and more open debate,” Landau told Army Radio on Sunday.

The decision on gas exports grew out of conclusions published by the Tzemach Committee headed by former Water and Energy Ministry director-general Shaul Tzemach. The committee, formed in late 2011, had called on Israel to keep the first 450 billion cubic meters for the country’s use, and allow the export of up to half of any additional amount extracted from the proven reserves. The formula would provide Israel with up to 25 years of gas reserves, according to the committee.

After protests by groups opposed to gas exports, Energy Minister Silvan Shalom announced several weeks ago that he would seek to lower the amount to be exported to between 39% and 43% of Israel’s reserves.

David Shamah contributed to this report.

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