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Israeli Natural Gas Development Mired in Contention

Exploration companies urge government to move forward

The recently-discovered massive gas reserves found off Israel’s Mediterranean coast can ensure Israel’s economic and political well-being for decades to come. International companies have invested billions of dollars in developing the gas fields and are calling on the Israeli government to pass legislation allowing them to move ahead.

The primary player in developing both the Tamar field, which has already begun producing natural gas, and the much larger Leviathan (named after the Biblical whale) is a partnership between Noble Energy in Texas and the “Israeli Delek Drilling company.

We have a roadmap that the government published to solve all the regulatory issues vis a vis the natural gas market in Israel,” Yossi Abu, the CEO of Delek told The Media Line. “Now it’s in the process of a public hearing and in the next week or two we hope to have a final decision in the government with respect to natural gas resources.”

Israel Gas Exports Conference – video feature [1]

Beyond strengthening ties with Jordan and Egypt, exporting natural gas could bring closer ties between Israel and Cyprus.

“It would give muscle to what has been referred to as a strategic realignment of the eastern Mediterranean that would bring Cyprus and Israel as well as Egypt to a new triangular relationship,” Theodore Tsakiris, a professor of the geopolitics of hydrocarbon at the University of Nicosia told The Media Line. “It would be not only based on energy but will be consolidated through the establishment of this energy cooperation.”

Israel’s natural gas industry sparked controversy when Israel’s Antitrust Commissioner David Gilo said that the two companies shared control of two-thirds of Tamar and 85 percent of Leviathan are a de facto monopoly. Gilo asked the government to cancel a government deal that would allow them to retain that control in exchange for selling two smaller fields called Tanin and Karish to a third party.

Israeli Prime Minister Binyamin Netanyahu overruled Gilo’s decision saying that natural gas is an issue of national security, and Gilo quit. Thousands of Israelis have attended protests against letting the deal go through over the past weeks, saying that “tycoons” are getting rich at the Israeli public’s expense. In several cases the protests have turned violent.

Much of their anger is directed against Yitzhak Tshuva, the self-made owner of Delek, who reportedly has $4.2 billion in personal wealth. Delek officials say that cancelling the deal would be a huge mistake that could cost Israel huge sums in future investments. Israel would be seen as a country that does not keep its promises to international companies. Yossi Abu of Delek says the company has already invested six billion dollars in infrastructure and is set to shell out ten billion dollars more. The deals to supply Egypt and Jordan have already been signed and offer great earning potential.

“We hope that Israel will not miss the very good window of opportunity to use the natural gas resources in order to establish a better relationship with our neighbors – Jordan, Egypt and Cyprus,” Abu said. “We see the natural gas resources as one of the ways to get to economic peace between Israel and our neighbors.”

Abu spoke at a conference at Bar Ilan University, open to the public, where at one point anger bubbled over. On a panel was Eliezer Marom, a former commander of the Israeli navy, who has worked for several international companies since leaving the navy. He sat next to Ya’akov Amidror, a former National Security Advisor who briefly worked for Delek.

During Q and A one audience member challenged Marom.

“All of these generals like you work for international companies after leaving the army,” he said. “You then represent their interests rather than Israel’s interests.”

“Apologize right now,” Amidror broke in furiously. “You have no idea how much Marom has done for our country. Your remarks are offensive and inappropriate.”

Marom only smiled.

“I have never worked against Israel’s interests,” he told audience. “But if anyone has any good job offers for me, I’m available.”

Social protests in Israel began in 2011 when hundreds of thousands of Israelis took to the streets to protest the increasing cost of living in what were originally termed the “cottage cheese protests.” Protests against the natural gas industry have become populist with calls to break the Noble Energy –Delek monopoly, and lower the price of gas for Israeli consumers.

Changing the terms of the deal could be disastrous for Israel’s investment climate, say analysts like David Weinberg, a columnist for The Jerusalem Post.

“There’s been a lot of noise and discussion over the last month about the threat of the BDS (boycott, divestment and sanctions) movement, and the damage it might do,” Weinberg told The Media Line. “No BDS movement in the world has the potential to do one-onethousandth of the damage to Israel as this debate over gas. The potential for profit and economic missteps here is far greater than the BDS movement could possibly throw at us.”