Opposition persists to vital agreement on gas work off Israel

Jan. 4, 2016
In Israel, does the fat lady ever sing?

In Israel, does the fat lady ever sing?

It's not over, the saying goes, until she does.

So is stalemate over for deepwater gas development now that Israeli Prime Minister Benjamin Netanyahu has taken a crucial legal step? After nearly a year, has the fat lady sung?

Giant Leviathan and Tamar fields, discoveries of groups led by Noble Energy Inc., can produce far more gas than Israel needs. But exporting the gas is controversial. Geopolitical sensitivity around any export scheme requiring a cross-border pipeline is only part of the reason.

Within Israel itself, political bickering over gas exports is feverish. The basic question is how much gas Israel should reserve for itself and how much it should allocate for export. But a secondary question is domination by Noble, Israel's Delek Group, and Delek subsidiaries of the production fairway taking shape in the Mediterranean between Israel and Cyprus.

In December 2014, David Gilo, the antitrust commissioner, suggested the Noble-Delek alliance restricted competition.

In August, the Israeli cabinet approved a gas-development framework that addressed Gilo's concern by trimming Noble and Delek holdings in Israel's offshore gas fields but allowed development to proceed. Gilo responded by resigning. His successor doesn't support the agreement.

The economy minister, however, can circumvent the antitrust commissioner by invoking national security or foreign policy. Although that official, Arye Deri, wasn't inclined to do so, his resignation last month allowed Netanyahu to claim the authority, consult with a legislative committee, and win support from a narrow majority of members.

Deepwater gas reserves "potentially transform us not just into an energy power but certainly into an important international force with very great capability," the prime minister said after invoking the clause that activated the gas framework.

Administrative formalities end there; political impediments do not.

Isaac Herzog, leader of the opposition Zionist Union, called Netanyahu's move "a cynical exploitation of security needs" and promised to challenge it in court.

The fat lady might only have cleared her throat.

About the Author

Bob Tippee | Editor

Bob Tippee has been chief editor of Oil & Gas Journal since January 1999 and a member of the Journal staff since October 1977. Before joining the magazine, he worked as a reporter at the Tulsa World and served for four years as an officer in the US Air Force. A native of St. Louis, he holds a degree in journalism from the University of Tulsa.