Natural gas remains a hot topic in Israel
The chairman of the Israeli Parliament’s Finance Committee, Eitan Cabel, said that Economy Minister Aryeh Deri has agreed to sign off on a proposed natural gas plan, but only if it is approved by the wider parliament. Earlier this month, Deri said that the development of natural gas is a problem that should be solved by the parliament, not a minister. “The gas issue is very complex and the public had to be exposed to it, and the Knesset (Israel’s parliament) needs to be exposed to it, this is not an issue that is resolved in the cabinet,” he said.
The new deal would exempt Noble Energy (ticker: NBL) and Israeli Delek Group from antitrust laws for the next 15 years, despite the Israeli government labeling the group a monopoly last year, reports Times of Israel. The deal has drawn a great deal of criticism, prompting Israel’s State Comptroller Yosef Shapira to investigate.
Shapira’s report was critical of the government, saying its policies had helped contribute to a de facto monopoly, as well as limit the country’s natural gas potential moving forward. The report said “there is only one working pipeline with a limited output,” which could lead to a situation in the future in which “Israel will have no backup supply of natural gas.”
Under the terms of the deal, the two companies would retain control over the Levithan gas field, which is responsible for most of the country’s natural gas production. The two companies would be forced to sell off part of their ownership in Israel’s other gas fields, the Tamar, Tanin and Karish.
The sales are aimed at opening the industry to competitors, and will set a price ceiling for future sales to Israeli companies. As part of the deal, Noble and Delek must also complete the development of the Leviathan gas field by 2019, allowing for future supplies.
The Israeli government recently agreed with Noble and Delek to raise the price of gas from their offshore operations, drawing criticism from the public. The government has elected to not regulate prices and will instead allow them to be determined by independent electricity producers.
“We’re determined to get the gas out,” said Prime Minister Benjamin Netanyahu. “We want to bring about the development of additional fields, and we know that Israel needs to be attractive … both to supply the needs of the domestic economy and to be attractive to investors,” he said when defending the decision not to regulate prices.