The gas deal signed

After much delay and political maneuvering, PM Netanyahu, in his role as Energy Minister, has signed the framework agreement between the Government of Israel and two oil companies, one Israeli, Delek, and one American, Noble Energy, over the exploitation of the major natural gas finds in the Mediterranean Sea.

This delay came about mainly after the companies announced major finds of gas deposits in two fields, Tamar and Leviathan, when it was realized that the Government had given the companies too much control over the oil and its profits compared to comparable agreements elsewhere in the world.  So the agreement was re-negotiated, resulting in a higher percentage of the profits for Israel and its people.  This caused one of the major companies, an Australian one, to withdraw from the agreement.  But, then there was major leftist opposition to giving the companies any rights over the oil.  This is absurd, since the oil would not have been discovered without the financial risks of the companies and they certainly have the moral and legal right to profit from their findings.

In order to make the deal, Netanyahu had to invoke Article 52 of the anti-trust law, the Restrictive Trade Practices Act (1988), that in principle prevents any kind of monopoly. In this, case Article 52 allows the PM to circumvent this law by invoking national security.  One can argue that access to the gas finds and the income from them is definitely a matter of national security.  In fact, the State is financing a large security operation to safeguard the wells out in the Med, some 80 miles off the coast of Haifa, and so this does justify compensation for the State and its people.

But, now that Netanyahu has signed the framework deal, the leftist parties are still challenging the deal in court.  If the deal is rejected it will cause the companies to withdraw completely and the gas will simply stay in the ground.  Totally self-defeating.  The gas companies are entitled to profit from the fruits of their private enterprise.  The deal, after dividing the profits from the Tamar field, which is already on-line, gives the oil companies greater control over the exploitation of the much large Leviathan field, that will cost much more to develop.

The income from the wells will not only significantly change the economic situation of Israel, but will allow Israel to provide supplies of natural gas to its neighbors, Cyprus, Jordan, the Palestinian Authority, Turkey and Egypt and it will mean that energy production in Israel will become significantly cleaner.

 

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