Netanyahu to Testify on Gas Deal in Knesset

The debate over the “gas framework” – the evolving deal under which Israel is licensing exploitation and development of the huge Leviathan gas field – hits its height Tuesday, as Prime Minister Binyamin Netanyahu testifies before the Knesset Economics Committee on why he believes the deal is a good idea. Netanyahu said Sunday that he was determined to push the deal with Noble Energy and Delek Drilling through. “I will not be pressured by the populists who want to leave the gas underground,” Netanyahu said. “This is a resource that will benefit all Israelis.”

With trillions of cubic feet of natural gas, the Leviathan field promises to be a huge economic windfall for Israel – with some of the gas to be used by the Israel Electric Company to produce power, and the rest to be sold to other countries, including Egypt and Jordan. The deal on how much gas the licensees, which include Noble Energy, a US energy firm, and Israel’s Delek Holdings, will be able to use and how much they will charge Israel for the gas sold under the license, has been a matter of great debate in Israel for several years.

The framework of the deal had been changed twice, as politicians in Israel claimed that the licensees were not paying enough for a deal from which they would make huge amounts of money. With the contract changed several times, Noble announced that it was withdrawing from the deal, but with the final version appears to have decided to return.

One snag that Netanyahu didn’t anticipate when preparing for his presentation was the announcement by Egypt that it was suspending negotiations with Israel for purchase of Leviathan gas, in light of a decision by international arbitrators that Cairo must pay out nearly $2 billion to Israel because it breached a former contract to sell Sinai gas to Israel. Experts said that it was likely that Israel would work out a deal to sell the gas, either forgiving part of the debt or spreading it out over many years, The sale of gas was likely to be far more lucrative then the money Egypt would shell out, even if it could pay the fine in full – a possibility many international economists are skeptical of, considering the blows the Egyptian economy has taken in recent years due to loss of tourism caused by ongoing terror attacks.

Hundreds of people protested against the proposed deal outside the Prime Minister’s home Tuesday morning in advance of the Knesset discussion. On Saturday, protests were held in Tel Aviv, Yerushalayim, Haifa, Beer Sheva, and other cities, with Tel Aviv’s 10,000 strong protest the largest.

According to figures released last month, the state so far this year has earned NIS 594 million ($152 million) from licenses for its natural resources, almost of all of it (NIS 580 million) from the Tamar gas field licenses. Experts favoring the Leviathan licensing deals say that the country could bring in billions of shekels in fees once production begins, while those opposed to the deal say that the state could be earning much more in a better deal.