Government Claims Petitions to Block Contentious Gas Deal Have No Legal Basis

Petitions filed by opposition parties, think tank and anti-corruption group claims Netanyahu overstepped authority to secure monopolistic market for energy firms.

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Prime Minister Benjamin Netanyahu and Economy Minister Arye Dery during a plenary discussion of the gas framework in the Knesset. Credit: Emil Salman
Avi Bar-Eli

The Israeli government came out on the attack on Wednesday as it issued its response to four petitions brought before the High Court of Justice seeking to block the controversial framework to regulate Israel natural gas industry.

“Reading four petitions shows that every one of them is lacking a factual, economic and legal reforms, rather their common practical purpose a one and simple – to prevent the government from advancing its policies in the Israeli natural gas sector sectors,” attorney for the state in their response to the appeals.

The move comes a week before the court is due to begin hearings on the petitions, which were filed by the Movement for Quality Government in Israel, The Academic Center for Law and Business as well as the Zionist Union and Meretz parties.

Israeli gas platforms controlled by U.S.-Israeli energy group Noble and Delek 15 miles west of Ashdod in the Mediterranean Sea. June 25, 2015.Credit: Reuters

The petitioners are seeking to block the gas framework, which the government reached with the energy companies Delek Group and Texas-based Noble Energy last year, which puts into place the final elements of the regulatory regime for the industry and clears the way for the development of the giant Leviathan field.

The four petitions are challenging three parts of the framework, most importantly Prime Minister Benjamin Netanyahu’s decision to override the antitrust law on national security grounds to let Delek and Noble operate as a cartel. He did that at the end of last year in his role as economy minister.

In addition, they are challenging the so-called “stability clause” in the framework agreement that give the gas companies immunity from regulatory changes for as long as 15 years. They also have taken issue with rules on export quotas, taxes and other issues.

Protesters wear masks depicting Prime Minister Netanyahu, Finance Minister Moshe Kahlon and outgoing Economy Minister Arye Dery at a rally against the gas deal in Tel Aviv, November 7, 2015.Credit: Ofer Vaknin

If the petitioners were to get what they are seeking, the partnerships controlling Leviathan and Tamar, which is already in production, would be broken up. They argue that the gas companies are too powerful and overcharging for gas, but Netanyahu and others have warned that any move the break up the partnerships would delay putting Leviathan in production and risk Israel’s energy security.

In regard to the antitrust override, which Netanyahu was empowered to give under Section 52 of the Antitrust Law, state attorneys on Wednesday rejected petitioners’ claim that it can only be used during an emergency or major crisis.

“The state’s position is clear: This authority is exceptional in nature, and should be applied sparingly, carefully and only in exceptional cases. Such is the case here,” the state attorneys said. They dismissed the petitioners’ skepticism about the national security considerations that went into the override as “foolish.”

Offshore Leviathan natural gas drilling site.Credit: Albatross

The Manufacturers Association, the trade group led by Shraa Brosh that presents the industrialist many of whom are users of the gas being produced by Tamar, also came in on the side of the government.

“The current framework (with its advantages and disadvantages) provides the certainty and stability necessary to bring about the development of Israel’s natural gas market as quickly as possible,” the association said in a friend of the court statement.

For its part, Noble rejected the petitions’ claims as part of a political vendetta. “The petitioners have worked tirelessly in the last years to prevent the development of gas reserves. The claims vary from time to time, but basically relfect a world view that good of the country demands the immediate confiscation of reservoirs from Noble Energy and its partners. That’s the simple truth,” the company said in its statement to the court.