Netanyahu Opts Not to Bring Gas Framework to the Knesset

Prime Minister's Office blames Dery's refusal to cooperate, but sources point to impact of Egyptian gas discovery.

Zvi Zrahiya
Zvi Zrahiya
Prime Minister Benjamin Netanyahu at the Knesset, June 24, 2015.
Prime Minister Benjamin Netanyahu at the Knesset, June 24, 2015.Credit: Emil Salman
Zvi Zrahiya
Zvi Zrahiya

Prime Minister Benjamin Netanyahu decided Monday against bringing the controversial framework agreement for the natural gas industry to the Knesset for approval, raising more question marks over a sector plagued by uncertainty and delays.

Sources in the Prime Minister’s Office said it acted after Economy Minister Arye Dery said last week that he would not use his powers to override a decision by the previous antitrust commissioner opposing the framework, and would leave it up to the new commissioner to decide. Doing that would make the Knesset vote irrelevant.

Netanyahu had been scheduled to bring the framework to the full Knesset Wednesday, when lawmakers return from summer recess. But to do that, he would have had to give parliament 48 hours’ notice, a deadline that passed Monday.

But other sources said the real reason for the decision was the surprise announcement by Italian energy company Eni on Sunday that it has discovered what it termed the biggest-ever gas field in the Mediterranean Sea, off the Egyptian coast.

If true, industry analysts said, Israel stands to lose contracts to export huge quantities of gas to Egypt. That, in turn, would render irrelevant the partners’ plans to develop the giant Leviathan field and many of the framework terms as well.

Still, the energy companies insisted Monday that their real problem was the delays in getting the framework approved and Israeli domestic regulations put into place, more than Eni’s announcement. Development of Leviathan has been halted while it partners, which also include the Texas company Noble Energy, await the framework’s approval.

“I want to say with compete certainty that our problem is still in Jerusalem and not in Egypt,” said Asaf Bartfeld, CEO of Delek Group, which has stakes in the Tamar and Leviathan fields, Israel’s biggest. “Our ability to get to [overseas] markets remains complicated because our hands and feet are tied. The minute Jerusalem frees our hands and feet we’ll be able to move forward,” he said.

Yossi Abu, the CEO of Delek Drilling, suggested that the Eni announcement didn’t fundamentally change anything.

“The Italians found gas in their first exploratory drilling, which they did just last week. They have a long road ahead of them and Leviathan and Tamar have a several-year advantage — assuming the framework is approved,” he said. “Egyptian needs won’t change because of the new find.”

That, however, wasn’t the consensus view, and shares of the oil and gas companies plunged in Tel Aviv Stock Exchange trading Monday in response to the news from Egypt.

Moreover, sources said that if Dery sticks to his promise not to use his override powers, that could add up to significant delays in winning approval for the framework. By the time of publication on Monday, Dery’s office had issued no comment.

David Gilo, the antitrust commissioner who had opposed the framework, officially stepped down Monday, but a search committee for his successor has yet to be formed and Uri Schwartz, the interim commissioner, won’t take it upon himself to make such a critical decision.

Sources said it would take one to two months for a new commissioner to be named, and then he or she would have to study the issue before reaching a decision. The decision, whatever it is, would then have to go to the antitrust court, which could sit on it for up to another six months.

The government and the energy companies had been pushing hard to get the framework approved as quickly as possible, citing Israel’s strategic needs of sealing deals with Egypt and other neighboring buyers. Egypt was the biggest and most important of the export markets for Israeli gas, but it now appears Egypt won’t need the gas at all.

Dery had zigzagged on the gas issue, saying he wouldn’t exercise his powers unless the Knesset approved the framework and then later saying he preferred for the new antitrust commissioner to make the decision. Since Dery took Netanyahu by surprise with his latest twist, the two have met twice but apparently reached no agreement.

In any case, Netanyahu was facing problems assembling a Knesset majority for the framework. His coalition has only 61 seats in the 120-member Knesset, and two coalition Knesset members have recused themselves from the vote, citing personal connections with the industry.

Meanwhile, lawmakers from Kulanu, a junior coalition partner, have expressed opposition or reservations about the framework, and Avigdor Lieberman, leader of the opposition Yisrael Beiteinu party, has said he will back the measure but at least one party MK has said she will oppose it.

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