Israeli Cabinet Approves Natural Gas Agreement

Israel’s Cabinet has approved a regulatory framework that will allow the continuation of development of natural gas fields in it exclusive economic zone.

Prime Minister Benjamin Netanyahu hailed the decision saying it would “will put into the state coffers, hundreds of billions of shekels,” which would benefit education, health, social welfare.

Mr. Netanyahu said the increased gas flow will also lower consumer prices by providing cheaper energy for electricity and manufacturing.

The approval follows the signing of an agreement last Thursday between Israel and Noble Energy and Delek Group for the development of the Leviathan gas field.

US-based Noble and Israel’s Delek have been producing gas from the Tamar field off the coast of Israel since 2013. 

As anticipated by Natural Gas Europe in July, the deal allows the two companies to keep ownership of the largest offshore field, Leviathan, while forcing them to sell off other assets. Delek Group will have to divest its holdings in the Tamar, Karish and Tanin gas fields within six years; Noble Energy will have to gradually reduce its stake in Tamar to no more than 25% within that same time frame. During these six years, prices for natural gas will be regulated. 

The vote in Cabinet saw the opposition of a Environmental Protection Minister Avi Gabbay, while three other ministers refrained from voting due to conflict of interests.

The deal still requires the approval of Israel’s legislature the Knesset, where debate will be focused on the about the price of gas for domestic consumers and the facilitation of competition.

Isaac Herzog, leader of opposition in legislature criticized the deal, commenting on Facebook that: “A government headed by me would decide on a gas deal that’s fair and decent for Israeli citizens that includes price controls and represents the real concerns for the future of the State of Israel.”