Economics Committee: Don’t Override Antitrust Veto to Approve Gas Deal

An aeriel view of the Israeli gas rig 'Tamar' situated about 80 km off the Israeli northern coast. Tamar was the first large-scale hydrocarbon resource discovered in international waters and claimed by Israel. After more than four years of drilling the flow of natural gas from the Tamar gas field has begun. Photo by Albatross Aerial photography/Nobel Energy/FLASH90
An aerial view of the Israeli gas rig Tamar, situated about 50 miles off the northern cost of Israel. (Albatross Aerial photography/Noble Energy/Flash90)

The Knesset Economics Committee on Monday recommended against approving the deal to license the Leviathan gas field to Noble Energy and Delek Drilling in its current form. The deal was opposed by former Economy Minister Antitrust Authority head David Gilo, and in order to approve the deal, the Economy Minister would need to override that opposition. The Committee said that doing so was “unworthy and unnecessary,” and recommended against it.

Former Economy Minister Rabbi Aryeh Deri resigned his post over the matter, refusing to approve the deal over Gilo’s opposition. The current Economy Minister is Prime Minister Binyamin Netanyahu, who is anxious to sign the deal. The Committee’s recommendation is just that, and Netanyahu is unlikely to shut the deal down as a result.

Despite the difficulties, Netanyahu said that the government has managed to put together a deal that balances the political demands with the economic realities.

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 U.S. 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 was 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 it appears to have decided to return, following the final version.

According to figures released last week, 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.