After Tiff, Gov’t Approves New Gas Deal

The government on Sunday approved the framework for the development of Israel’s natural gas resources. The new framework is the same as the previous one, except that it omits the “stability clause” that the High Court in March ruled was problematic. According to sources, Prime Minister Binyamin Netanyahu was able to convince the government’s skeptical gas development partners Noble Energy and Delek Drilling that he would work to ensure that they are not subjected to further changes in the deal.

The stability clause was a part of the framework deal between the government and the licensees of the Leviathan gas field, Noble Energy and Delek Drilling, which promised that the conditions of the deal – including taxes, royalties, and licensing fees – will not change for at least ten years. The Court ruled that the government had no right to lock in future governments to a deal signed now. In its decision, it gave the government a year to pass a law in the Knesset that will arrange the conditions of taxation and royalty payments for that period of time.

During the discussion prior to the approval, Netanyahu verbally sparred with Energy Minister Yuval Steinitz over who deserved credit for the final approval of the deal. Steinitz thanked members of his staff and Ministry officials for their work, and Netanyahu, according to a recording of the meeting, said “maybe there are other people to thank?”

In response, Steinitz that there were many who deserved credit, but Netanyahu pressed, saying “perhaps you could name one more?” Steinitz responded by saying that “I thanked those who worked in recent weeks on this. I can’t name all the people who were involved throughout the process.” In response, Netanyahu said that “maybe the Prime Minister deserves some thanks as well.”

Opposing the deal was Environment Minister Avi Gabay, who said that “the past nine months have shown that this deal is a huge mistake at this time.” With gas prices sinking, “the prices set in the framework are too high, and will prevent use of the gas to replace other less clean fossil fuels. The deal gives the companies authority over the prices of gas, so they can raise them anytime they want and still get compensation from the government because the original framework was changed.”