Israel announces deal on offshore gas development

Prime Minister Benjamin Netanyahu on Thursday announced a major deal between his government and a consortium including US firm Noble Energy on natural gas production in the Mediterranean Sea.

“The agreement will bring in hundreds of billions of shekels [tens of billions of dollars] to Israeli citizens over the coming years,” Netanyahu said in a televised statement, without providing details.

“I shall bring this agreement to the cabinet on Sunday. I’m sure it will pass by a large majority of votes.”

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.

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.

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 Steinitz said the energy companies had “presented demands that we can’t accept,” primarily on the issue of an Israeli guarantee of “regulatory stability.”