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May 19, 2016 11:22 am

Israeli Natural Gas Deal Revived Thanks to Softening of Contested Clause

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Natural gas from Israel's Tamar field began flowing to customers in 2013. Photo: Screenshot / Youtube.

A gas rig off the Israeli coast. The development of the Leviathan gas field began last January, Photo: Screenshot / Youtube. – After a series of hurdles, a breakthrough has been achieved in the negotiations over a deal that would regulate the exploration, harvesting, and development of Israel’s Tamar and Leviathan offshore natural gas fields.

The framework agreement has been contested by multiple legal petitions seeking to repeal it. Most recently, Israel’s High Court of Justice overturned the deal, giving the Knesset legislature a year to amend the plan or risk cancellation of the deal altogether. The court cited a clause in the deal that would prevent Israel from making significant regulatory changes for the next 10 years as the main reason for scuttling it, arguing that the clause, dubbed the “stability clause,” restricts the Knesset’s powers.

The initial “stability clause” stipulated that the Israeli government could not impose regulatory changes, such as breaking up suspected monopolies, on the consortium for a full 10 years from when the deal was signed. On Wednesday, the companies invested in harvesting the gas and Israeli Energy Minister Yuval Steinitz reached an agreement on a new framework that in effect softened the contested clause.

According to Steinitz’s office, the representatives of the energy companies agreed to rework the clause to allow future governments to amend the deal, should changes become necessary—something that the previous clause restricted.

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“The new formulation [of the clause] gives future governments more room to exercise their judgment and implement policy changes regarding the natural gas industry…The proposal will be brought to a cabinet vote in the coming days,” Steinitz’s office said.

Steinitz further remarked on Wednesday that “after a concerted effort, we managed to formulate a suitable substitute to the stability clause, under the guidelines mandated by the High Court of Justice. Its purpose is to generate a regulatory environment that encourages investment. I am hopeful that the development of the Leviathan gas field, which began last January, will now continue according to the original timetable.”

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  • Sandra Strehlou

    How is it that the article does not address that the underwater gas fields include vast resources (Gaza Marine) that are in Palestinian waters? A report from the Brookings Institute seem to state pretty clearly that development of the rich and easily accessed Gaza Marine depend on cooperation between the Palestinian and Israeli government. Is there cooperation?