Government, energy giants rework nixed clause in gas deal

After High Court struck down agreement’s ‘stability clause,’ new draft allows future governments to amend terms with consortium

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)

Energy Minister Yuval Steinitz announced Wednesday that the government had drafted a new clause in its high-stakes gas deal with two energy companies struck down in March by the High Court of Justice.

The new draft deal allows future governments to amend the natural gas agreement should they be necessary, Walla news reported.

The proposed amendment will be voted upon by the government at Sunday’s weekly cabinet meeting.

The High Court of Justice ruled in March that a controversial deal to extract natural gas from massive offshore fields would be canceled within a year unless the stability clause, which barred future governments from altering the agreement, were changed.

The ruling put a major damper on efforts by the state to approve the agreement with an Israeli-US consortium and override opposition by the state regulator, putting the brakes on a deal touted by the government as having the potential to bring hundreds of millions into state coffers and transform the country into a regional energy powerhouse.

The court, however, suspended its ruling for a year to enable the Knesset to amend the agreement.

Prime Minister Benjamin Netanyahu has made the gas deal a centerpiece of his agenda, saying the discovery of large reserves would bring energy self-sufficiency and billions of dollars in tax revenues. But critics said the deal gave excessively favorable terms to the government’s corporate partners.

Activists have been furious with the gas deal’s lack of transparency, including the “stability clause,” which meant that the government could not impose regulatory changes, such as breaking up suspected monopolies, on the consortium for a full 10 years.

The deal came after a year of the prime minister 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.

In February, Netanyahu went before the court and urged that the deal be approved, saying it was critical to ensuring Israel’s security and economic position in the Middle East.

File: Prime Minister Benjamin Netanyahu at a Knesset committee meeting on the controversial natural gas deal, December 8, 2015. (Yonatan Sindel/Flash90)
Prime Minister Benjamin Netanyahu at a Knesset committee meeting on the controversial natural gas deal, December 8, 2015. (Yonatan Sindel/Flash90, File)

If the current deal isn’t approved, he told the panel of five justices, “we will lose our export potential to Jordan, Turkey, Egypt, the Palestinians and also the European Union.”

The court did not strike down another controversial part of the ruling, Clause 52, which is the antitrust law that enables the Economy Ministry to overrule the antitrust issues if national security is at stake.

Raoul Wootliff, Ilan Ben Zion, AFP and AP contributed to this report.

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