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Cabinet expected to okay natural gas deal Sunday

Agreement reached late last week between government and US-Israel consortium will bring in hundreds of billions of shekels into coffers, Netanyahu claims

Prime Minister Benjamin Netanyahu leads the weekly cabinet meeting, on June 21, 2015. (Alex Kolomoisky/POOL)
Prime Minister Benjamin Netanyahu leads the weekly cabinet meeting, on June 21, 2015. (Alex Kolomoisky/POOL)

Israel’s government is expected Sunday to give the go-ahead to a controversial gas deal that backers say will bring in hundreds of billions of shekels from developing offshore fields, but detractors claim will lead to the Israeli public being fleeced.

Should the cabinet okay the agreement between the state and an energy consortium including US-based Noble Energy and Israel’s Delek, it will then move on to the Knesset, where it is expected to face an uphill battle to passage.

On Thursday, Prime Minister Benjamin Netanyahu announced the deal in a televised statement, saying he was confident it would sail through the cabinet.

“The agreement will bring in hundreds of billions of shekels [tens of billions of dollars] to Israeli citizens over the coming years,” Netanyahu said.

Negotiations have been underway with a consortium including Noble and locally based Delek Group, with talks involving natural gas pricing for Israeli reserves and future production.

Noble and Delek 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, considered the largest in the Mediterranean, by 2019.

The negotiations have been controversial in Israel, with critics fearing regulations would overly favor the companies involved.

Economy Minister Aryeh Deri has yet to say how he will vote on the deal, telling reporters only that he was “studying the draft.”

Deri and a number of other coalition lawmakers cried foul over a separate attempt by Netanyahu to push forward a version of the gas deal earlier in the year, causing the prime minister to abort the vote at the last minute.

In May, antitrust commissioner David Gilo said he was resigning over his opposition to the dominant position of Noble and Delek in the Leviathan and Tamar fields.

In this undated photo from Noble Energy, the company does a well flowback test to provide a more accurate estimate about the amount of natural gas and the economic potential of the well. (courtesy Noble Energy)
In this undated photo from Noble Energy, the company does a well flowback test to provide a more accurate estimate about the amount of natural gas and the economic potential of the well. (courtesy Noble Energy)

Under the agreed terms, the Delek Group, owned by Yitzhak Tshuva, will sell its holdings in the Tamar, Karish and Tanin gas fields within six years and Noble Energy will gradually reduce its holdings in Tamar to no more than 25 percent within that same time frame. During those six years, prices for natural gas will be regulated.

The sides also agreed that while the government will be bound to the agreement for 10 years, the Knesset will not be, and may vote on changes to it in the future.

The announcement of the deal marked a stark turnaround, merely a day after Minister Yuval Steinitz said the energy companies had “presented demands that we can’t accept,” primarily on the issue of an Israeli guarantee of “regulatory stability.”

Israel Radio reported Tuesday 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.

AFP contributed to this report

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