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Government, principle investors agree terms on natural gas development
Israel’s Infrastructure, Energy and Water Minister Yuval Steinitz announced yesterday evening that following a protracted negotiation process, the government has reached agreement with the two principal investors in Israel’s offshore natural gas reserves, regarding the industry’s development and regulation.
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. The two companies indicated that they may end development entirely and concerns were raised over how this might impact wider investment in the country. Following lengthy negotiations, Israel’s government announced an agreement with Noble and Delek in June, overlooking their “monopoly” in return for selling holdings in Tamar and two smaller fields. Opponents accuse the government of selling Israel’s natural resources to private interests.
Gilo refused to approve the deal and the government was unable to secure a Knesset majority on the issue, sending the two sides back to the negotiating table. Steinitz’s office announced last night that a compromise had been agreed, saying, “A short while ago an agreement was reached on the outline that will allow the development of oil and gas reserves in the State of Israel after a delay of several years.” The revisions apparently include issues surrounding price supervision and milestones for the development of the larger Leviathan field.
The revised agreement is expected to be put to a Cabinet vote on Sunday. Israel Radio news says that the Knesset will be asked to discuss and vote on the agreement in September, in what is expected to be an impassioned debate.