Battle Over Israel’s Natural Gas Reserves Heads to High Court

Petitioners oppose the clause that lets Delek Group and U.S. firm Noble Energy hold a monopoly for up to 15 years.

Tamar natural gas rig, located 90 kilometers west of the city of Haifa, Israel.
AP

Prime Minister Benjamin Netanyahu’s plan to develop Israel’s natural gas reserves is heading to the High Court of Justice, as expected.

On Monday, four days after Netanyahu said he intended to get around the Antitrust Authority and approve the plan for the monopoly that controls Israel’s natural gas reserves, a petition was filed at the High Court of Justice against the deal’s most contentious clauses.

The College of Law and Business and a sustainable economy NGO petitioned against a clause, demanded by U.S.-based Noble Energy, stating that the monopoly would receive immunity against future regulatory decisions for 10 to 15 years. This clause would keep future governments and trustbusters from taking steps to break the gas cartel.

Noble Energy and its Israeli partner, Delek Group, control Israel’s largest offshore natural gas reserves, the Tamar and Leviathan fields, as well as several smaller reserves.

The petitioners say the government’s commitment not to change policy for such a long stretch "hurts Israel’s democratic values and gives the companies a massive financial benefit, without the government having the legal authority to do so."

The petition calls on the court to issue an injunction blocking that clause from advancing in legislation, and to have the government explain why it was included in the agreement with the gas companies in the first place.

“The stubborn, overarching and ongoing promise to maintain a stable regulatory environment ties the current government and future governments for at least 10 years to a plan that could later be revealed to be not in the public interest, while the state will be kept from changing it in a way that suits the changing situation,” the petition states.

“Thus, the deal could greatly damage Israel’s economy, the citizens and the public interest as a whole, while also gravely damaging the ability of state authorities to handle public resources in keeping with the public interest.”

The petitioners say this grants the gas companies a massive financial benefit, an argument that was also made by Attorney General Yehuda Weinstein. According to the petitioners, the deal protects the companies from the vagaries of the market that might require new regulations — and the public interest might require these changes.

In their negotiations with the government, the companies were reacting to previous attempts to set new tax rates for Israel’s natural resources and to set quotas for how much of Israel’s natural gas could be exported.