Controversial natural gas deal passes Knesset

Lawmakers vote 59-51 to approve agreement with offshore drilling companies despite accusations of a monopoly

Prime Minister Benjamin Netanyahu and Minister of National Infrastructure, Energy and Water Resources Yuval Steinitz during a Knesset session on the reform of Israel's natural gas sector, September 7, 2015. (Yonatan Sindel/Flash90)
Prime Minister Benjamin Netanyahu and Minister of National Infrastructure, Energy and Water Resources Yuval Steinitz during a Knesset session on the reform of Israel's natural gas sector, September 7, 2015. (Yonatan Sindel/Flash90)

After hours of debate, weeks of delays, and months of negotiations, the Knesset narrowly approved a controversial natural gas deal, with 59 lawmakers in favor, and 51 opposed.

Under the terms of the outlined, the Delek Group 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 Knesset was slated to also vote on whether to transfer the monopoly-approving authority of Economy Minister Aryeh Deri — who has refused to exercise his ministerial power to fast-track the new gas deal with energy companies — to the cabinet, but the proposal was pulled at the last minute.

The Knesset instead voted on approving the outline of the licensing agreement between the state and the energy consortium, though its not clear if the passage of the outline constitutes a legally binding agreement to begin development of the offshore fields.

Prime Minister Benjamin Netanyahu hailed the vote and alluded to an upcoming vote on transferring the Deri’s powers to the cabinet.

“We improved the outline, we passed it in the Knesset, and we passed it today with an overwhelming majority in the Knesset,” he said. “There is another obstacle, but when I want to achieve something, I get it.”

The approval came after Netanyahu dallied over putting the agreement up for a vote. Last Monday the prime minister said he would wait until a new antitrust commissioner had been appointed, and then last week approved sending the deal to the Knesset.

Netanyahu, whose razor-thin coalition of just 61 MKs already struggles to maintain a majority, was disadvantaged by the abstentions of three ministers – Moshe Kahlon, Yoav Galant, and Haim Katz – over purported conflicts of interest. Education Minister Naftali Bennett of the Jewish Home party also didn’t attend the vote.

However, a number of legislators from opposition party Yisrael Beytenu crossed the aisle, giving Netanyahu the support he needed to okay the outline.

The US company Noble Energy and its Israeli partner Delek Group have faced a political backlash in recent months over the proposed deal with the government to develop a number of sizable natural gas reserves discovered in Israeli waters in recent years.

The deal has been controversial, with critics, including former antitrust commissioner David Gilo, expressing concern that the deal created a de facto monopoly that would lead to high gas prices for Israelis.

The issue was thrown into the spotlight when Gilo, while still antitrust commissioner, said last year that the Noble-Delek partnership resembled a monopoly, and called for opening Israel’s natural gas market to increased competition. Gilo tendered his resignation in May over the dispute.

Netanyahu has championed the controversial deal, saying it would pump billions of shekels into the economy.

In August the cabinet approved the disputed natural gas deal, paving the way for the Knesset to vote on the measure, despite criticism that the arrangement favored the energy companies.

However, the agreement must still pass the Antitrust Commission, which is waiting for the appointment of a new chief.

Deri, who has the legal power to override the commissioner and approve a monopoly, told Knesset reporters last week that he would refrain from exercising his authority in the matter and would await the appointment of a new commissioner.

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, prompting the prime minister to abort the vote at the last minute.

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