BICOM

A compromise agreement between the government and the two principle investors in the development of Israel’s off-shore natural gas was approved by the Security Cabinet yesterday, but final agreement was delayed by Economy Minister Aryeh Deri.

The Leviathan and Tamar natural gas fields are thought to contain around 800 billion cubic metres in gas, enough to supply the Israeli market for a century. Israeli company Delek Drilling and American firm Noble Energy hold controlling stakes in both fields and have been largely responsible for their development so far. Deals have already been agreed to supply significant quantities of gas to Jordan and Egypt.

However, further development was thrown into doubt in December 2014, when Israel’s Antitrust Regulator, David Gilo recommended ending the dominance of Noble and Delek, accusing them of constituting a monopoly which “controls all the gas reserves on the coast of the state of Israel.” Noble and Delek indicated that they may end development entirely and concerns were raised that Gilo’s recommendation if adopted, would impact not only the Israeli energy industry but wider investment in the country, due to concerns of over-regulation.

Following lengthy negotiations, it was recently announced that Israel’s government had reached agreement with Noble and Delek, which would see the government “forgive” the monopoly in return for relinquishing a degree of control by selling holdings in Tamar and two smaller fields. The compromise agreement was brought to the Security Cabinet yesterday, so as to override the Antitrust Authority. Although the outline was approved, Economy Minister Aryeh Deri refused to sign the provision which would use his ministerial authority to sidestep the Antitrust Authority.

The Security Cabinet agreed to pass the agreement on to the wider cabinet and possibly the Knesset for discussion and eventual approval is expected. Prime Minister Benjamin Netanyahu commented, “We are promoting a realistic solution that will bring natural gas to the Israeli market and not a populist solution that will keep the gas deep underground.”