Two days after the High Court of Justice struck down a key component of the gas framework deal, Energy Minister Yuval Steinitz on Tuesday began the process of meeting the court’s objections and expressed optimism that the work could be completed quickly.
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“I think it will take a few weeks or maximum a couple of months,” he told Reuters in an interview.
Energy shares, which had been laid low by the court’s decision, rallied on Tuesday, with Avner Oil and Gas Exploration up 2.7% to 2.16 shekels (57 cents), Delek Drilling up 2.8% to 11.16 and Ratio ahead 3.6% to 23 agorot on the Tel Aviv Stock Exchange. In New York, Noble Energy – the Texas-based company with stakes in the Tamar and Leviathan gas fields – was up 1.2% at $30.06 late afternoon local time.
The High Court disallowed the framework’s so-called stability clause, under which Israel undertook to make no regulatory or tax changes for the gas industry for the next 10 years. The judges gave the government a year to find an alternative.
The stability clause was a key element of the framework the government reached with the gas companies last year outlining terms governing the sector and was supposed to pave the way to develop the giant Leviathan field. That is now frozen pending a revised framework.
Energy Ministry Director General Shaul Meridor stressed in an interview with Army Radio that the court approved the rest of the framework and that the framework need not be torn up. He remained optimistic, despite falling world energy prices and the failure to date to find major export markets for the gas.
“The gas companies have a business interest in the development [of Leviathan] in current market conditions,” he said.
On Tuesday, Steinitz met with Yossi Abu, the CEO of Delek Drilling and Avner, and Bini Zomer, the head of Noble Energy Israel, for the first time since the court decision. He also named a team headed by Meridor to carry out talks with the gas companies.
Steinitz laid out three of the possible solutions to the problem created by the court’s ruling. The first would be to legislate the stability clause or enact a broader law empowering the government to make such a concession in large infrastructure projects.
Another option is to amend the stability clause. “We keep the right to make changes, but if this government or the next government will make significant changes, then [the companies] will be able to ask for compensation,” Steinitz said.
A third option is a “self-safety network” that could be a government commitment to the companies to buy a certain amount of gas at a minimum price to ensure they can repay their debts.