Prime Minister Benjamin Netanyahu signed a waiver yesterday exempting Israel’s natural industry from further antitrust scrutiny in a move that clears the way for the development of the giant Leviathan field.
The signing marked the final piece of the puzzle to approve the so-called gas framework that sets terms for control of the fields and other key issues related to the industry. It ends – or nearly ends – a year of fractious debate over whether the framework ensures competition and low prices.
“This [deal] is important for the economy, for security, for society and for our external relations,” Netanyahu said at the signing ceremony. Netanyahu, who has justified the unprecedented override of antitrust on national security grounds, said he would meet with Cypriot and Greek leaders next month to discuss a regional energy tie-up.
The fact that Netanyahu signed the waiver – exercising his right as economy minister under Section 52 of the Antitrust Law – illustrated the importance he sees in implementing the framework.
The signature capped a year of controversy that saw the antitrust commissioner resign in protest, while Arye Dery stepped down to let Netanyahu take his place as economy minister and sign the waiver. Also, there were two weeks of Knesset hearings and street protests.
The extent of the bitterness over the issue was clear in a speech at the Herzilya Interdisciplinary Center last night. Energy Minister Yuval Steinitz was booed by protesters.
In any case, energy shares rallied on yesterday’s news, with the Tel Aviv Stock Exchange’s oil and gas index climbing 3.7% to close at 941.53 points.
But the framework still faces one more obstacle from the High Court of Justice, which will begin hearings in February on petitions by people declaring the waiver unlawful. Hours after Netanyahu signed the waiver, the left-wing Meretz party became the fourth group to file suit to block it.
Noble Energy, the lead partner in Leviathan and the Tamar field, lauded the signing. “This enables us to move forward with development planning,” said Keith Elliott, senior vice president for the Eastern Mediterranean.
Noble said it expected to conclude external financing agreements required to reach final investment decisions, which it estimated would be taken before the end of next year.
Leviathan, with estimated reserves of 622 billion cubic meters, will cost at least $6 billion to develop and is scheduled to begin production between 2018 and 2020.
But even with the framework in place, development of the field – and expansion of the Tamar field – face considerable challenges.
The first is the High Court, which observers said was likely to avoid interfering but may take its time doing it. “The court will want to examine it quite closely and tread carefully,” Michael Barron, director of global energy and natural resources at Eurasia Group, told Reuters.
Finally, the Leviathan partners have yet to develop firm contracts to export the gas. The Israeli market is too small to take Leviathan’s entire output, but agreements with Egypt and European companies like BG Group operating in Egypt haven’t been finalized.
In August, Egypt announced a major gas find of its own, and this month Cairo said it was freezing negotiations between the Israeli gas partners and Egyptian government companies to protest an arbitration panel’s awarding Israel $1.8 billion.
With reporting by Reuters