Israel’s energy minister presented proposed guidelines on Tuesday for regulating the country’s offshore natural gas reserves that may unlock development of one of the largest deepwater discoveries in recent years.
The proposals, set out five years after the discovery of the Leviathan field, prompted the resignation of the antitrust commissioner and generated street protests earlier this week amid claims the policy fails to break up a monopoly and will result in high prices for Israeli consumers.
“We have to get the gas out of the sea and we will do everything to end the delays that have cost us heavy losses,” Yuval Steinitz, minister of national infrastructure, energy and water resources, said at a press conference in Jerusalem. “The gas must reach our citizens. The framework we have reached is the best one possible that will bring about the development of the key gas fields of Israel quickly.”
Steinitz is spearheading a government drive to overcome critics and push ahead with developing the country’s largest gas field after the proposals ran into objections from Israel’s antitrust regulator.
The plan unveiled for the first time on Tuesday requires Israel’s Delek Group Ltd. and Houston-based Noble Energy Inc. to sell stakes in smaller fields while maintaining their grip on the larger Leviathan field. The plan would also require companies to cap prices for a number of years until competition matures, promising investors and explorers regulatory quiet for the next decade in an effort to attract new players.
Last week, the Movement for Quality Government in Israel petitioned the High Court of Justice to block the plan and on Tuesday the State Comptroller asked the goverment to wait with its decision until he publishes his report on the matter.
Arguments over policy have stalled the development of the Leviathan field, the largest reserve, held primarily by Noble and Delek Group. A parliamentary vote that would have given the cabinet the authority to push ahead with the framework was delayed Monday, after Prime Minister Benjamin Netanyahu failed to secure a majority, Israel’s Ynet reported.
The regulatory uncertainty has also thrown into limbo gas export agreements with Egypt and Jordan, the two Arab countries with which Israel has peace treaties. Rapid development of Leviathan and the other fields is of “paramount importance,” in terms of security and foreign relations, a cabinet committee on national security ruled last week.
The plan requires Noble to dilute its stake in Tamar, the nation’s second-largest field, to 25 percent from the current 36 percent, and for Delek to sell its entire stake in Tamar within six years. They would also have to sell their holdings in the smaller Karish and Tanin fields within 14 months. Development of Leviathan would be delayed to at most 2019, from the original 2018 target. Exports from Tamar will be allowed immediately and not contingent to the prior development of Leviathan, the guidelines say.
The proposals will now be submitted for public comment. Steinitz said he expects the government will vote on the framework within a month.
Shares in Delek Group Ltd. declined for a third day, dropping 2.8 percent to 1,113 shekels, the lowest since May 18, at the close in Tel Aviv. The Tel Aviv-Oil & Gas Index declined 1 percent to its lowest since May 18.