Officials Square Off on Role of Gas in Regional Security

Officials and experts squared off Wednesday on issues of regional and energy security as the Knesset Economic Affairs Committee held another day of hearings on the government’s deal with the partners in Israel’s offshore natural-gas fields.

National Security Adviser Yossi Cohen said it was critical that Israel develop the Leviathan field and export gas to friendly states like Egypt and Jordan and warned of the danger of Iranian gas flooding the regional market.

Cohen denied that the discovery of the giant Zohr field in Egypt in August, whose reserves are enough to supply the country’s domestic needs, had changed the security picture and rendered Israeli gas exports to Egypt irrelevant.

“I haven’t found any big change between the opinion we wrote on foreign affairs-security considerations in the gas framework before the big Egyptian discovery and after,” he told lawmakers. “We see advancing relations between Israel, Egypt, Jordan and Turkey as a critically important and urgent matter.”

The hearings are being held before Prime Minister Benjamin Netanyahu, who is also economy minister, signs a waiver overriding antitrust objections to the framework. As economy minister, he has the authority to do so, providing he can show that national security considerations outweigh antitrust issues.

The hearings come amid a bitter debate about this trade-off. The deal’s proponents say the giant Leviathan field must be developed to guarantee Israel a second source of natural gas and to produce enough to export.

The partners in Leviathan and Tamar have reached preliminary agreements to sell gas to Egyptian users and to two foreign companies operating liquefied natural gas plants in Egypt, that would reexport the LNG to Europe. But development of Leviathan has been suspended until the deal is approved. Tamar is already on line.

But Uzi Arad, who was the head of Israel’s National Security Council between 2009 and 2011 and now teaches at the Interdisciplinary Center in Herzliya, expressed reservations about the security issue.

“The factors in ensuring stability in Egypt are for Military Intelligence to assess — you can ask them about the effect on Egyptian stability if Israeli gas is supplied to their LNG plants and exported to Europe from there,” Arad said.

The possibility of laying a second pipeline from the Tamar field in order to guarantee an uninterrupted supply of its natural gas in the event of technical or other problems is an additional security consideration, as is development of Leviathan.

Environmental Protection Minister Avi Gabai said he supported exporting gas from Tamar but only on condition that a second pipeline linking the offshore field to Israel’s coast were laid and the partners meet the deadlines for developing Leviathan.

Gabai’s appearance before the committee was controversial. Attorney General Yehuda Weinstein had barred him from speaking out against the gas deal due to conflict-of-interest issues. Gabai criticized many of the framework terms.

“The information I have belongs to the public so I refused to accede to requests not to appear,” he told lawmakers.

“Fortunately, the attorney general also thought I had to appear but added exacting rules on what is permitted and what is not. ... These are anti-democratic rules that have to be changed.”

As to the framework itself — which spells out ownership stakes and pricing issues – Gabbai said he believed true competition is impossible and preferred imposing price controls in the domestic market and giving the companies a free hand in pricing gas exports.

“I don’t think there can be effective competition, so I don’t think [the issue] is important,” he said. “I think increasing [infrastructure] and supply security is critical. I think we need to create a mechanism to incentivize the development of Leviathan. I think we need to export, if in limited amounts.”

Gabbai’s remarks echoed those of Bank of Israel Governor Karnit Flug, who attend the hearings on Tuesday.

“A prolonged breakdown in one of the systems responsible for the flow of natural gas from the Tamar site to the delivery system in Israel would present the economy with a serious problem,” Flug said, warning that plans for a second pipeline by 2020 when Leviathan goes on line created a dangerous window of exposure.