The Secret Behind Netanyahu’s Natural Gas Secrecy

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Drilling at the Leviathan natural gas field off the Mediterranean shore. Credit: Courtesy Albatross

Energy and Water Resources Minister Yuval Steinitz’s press conference Tuesday discussing the government’s plan for the natural gas cartel and gas prices was an anticlimax.

The proposal to ease restrictions on gas exports was officially made known two weeks ago, the decision against imposing government supervision over gas prices was public knowledge last week, and in recent days the other benefits promised to the gas partners — Texas-based Noble Energy and Israel’s Delek Group — had been leaked far and wide.

There were few secrets left and Steinitz pulled no surprises out of his hat. So why didn’t Prime Minister Benjamin Netanyahu just present the plan’s main points to the public last week when they were being deliberated by the security cabinet? Why did he try to get Knesset lawmakers to approve overriding antitrust chief David Gilo’s opposition without telling them the framework’s terms? It’s no surprise he couldn’t enlist enough MKs to support the override.

The answer appears to lie in a seemingly innocuous section of the framework called the “stability clause,” which bars the government from taking any steps to change the ownership structure of the Tamar and Leviathan gas fields or imposing more competitive marketing arrangements. It effectively ties Israel’s hands for as much as 15 years and, in an unprecendented move, goes over the head of the Antitrust Authority.

It’s understandable that Noble and Delek want regulatory certainty. They're about to invest $6 billion to develop the giant Leviathan field and don’t want  to wake up one day to find the government demanding that they divest part of it or otherwise interfering. But with the “stability clause,” the government has ceded sovereignty not just to a private sector monopoly with part-foreign ownership but to a monopoly whose influence reaches every sector of the economy.

It’s not clear why, before exhausting every attempt to repair the grave pricing distortions caused by Noble/Delek’s exploitation of their monopoly power to date, Netanyahu decided to tie the hands of future governments, too, lest they dare try to fix his mistakes. By what authority is Netanyahu pledging to grant immunity to an emerging monopoly? How can he commit to deny the next government freedom to craft legislation on the matter?

Prime Minister Benjamin Netanyahu at the cabinet meeting on Sunday June 14, 2015.Credit: AP

That’s why Netanyahu hid the plan from the legislators before seeking their approval to circumvent the antitrust commissioner. If they had known about the Trojan horse in his plan, they never would have voted to forgo their authority and hand a parliamentary veto to Delek Group and Noble Energy.

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