Israeli court blocks government’s natural gas plan in blow to energy firms – Reuters
By Ari Rabinovitch

Israel’s Supreme Court blocked a controversial plan to develop the country’s natural gas fields on Sunday, dealing a blow to energy companies operating in the eastern Mediterranean and drawing fire from the government.

Prime Minister Benjamin Netanyahu reached a deal last year with Texas-based Noble Energy (NBL.N) and Israel’s Delek Group (DLEKG.TA) that would leave them in control of the country’s largest gas field, Leviathan, while forcing them to sell smaller, yet sizeable, assets.

The agreement also provided an outline for the next decade, with the government committing to leave taxes, export quotas and other regulation unchanged, and the companies agreeing to develop Leviathan at an accelerated pace.

The court, however, said the government was not in a position to make such long-term commitments.

A commitment “that binds the government to the outline, including no changes in legislation and opposing legislative initiatives for 10 years – cannot stand,” the court said in its ruling.

The cabinet could try to pass a law in parliament, the judges said, but given the strong opposition and Netanyahu’s single-seat majority, such a move seemed unlikely.

The court gave the government a year to come up with an alternative arrangement or the outline will be cancelled.

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“(The) decision severely threatens the development of the gas reserves of the state of Israel,” Netanyahu said of perhaps his biggest political setback since re-election a year ago.

The prime minister even made the unusual step of defending the deal in the Supreme Court last month.

“Israel is seen as a state with excessive judicial interference in which it is difficult to do business,” he said. “We will seek other ways to overcome the severe damage that this curious decision has caused the Israeli economy.”

Noble and Delek have held off on developing Leviathan, a $5-$6 billion investment, until the deal was approved.

In a joint statement, they commended the court for opposing just one section of the outline.

“In order to allow us to meet the framework goals, primarily the development of Leviathan by the end of 2019, we call on the government to facilitate the stability provisions in a short time frame,” the companies said.

Expect a sharp drop in gas companies’ share prices on Monday in Tel Aviv, said Noam Pincu, an analyst at the Psagot brokerage.

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The deal would have also encouraged new energy companies who have been waiting for regulatory uncertainty to clear up before investing in exploration.

However, it also drew a lot of opposition including from public advocacy groups and opposition lawmakers, who said it would still have left Noble and Delek in control of too much of Israel’s gas.

Leviathan, with an estimated 22 trillion cubic feet of gas, was one of the world’s largest offshore discoveries of the past decade. It is earmarked mostly for exports and the developers have inked a number of preliminary, multi-billion dollar deals.

Analyst Yehonatan Shohat of Leader Capital Markets, one of Israel’s top investment banks, said he expected Netanyahu to return to the negotiating table rather than seek a new law.

“The bottom line is that it’s bad news for the partners, but in our estimation, and given the sensitivities of the subject, the last word has yet to be spoken,” he said.

(Reporting by Ari Rabinovitch; Editing by Alison Williams and Digby Lidstone)
http://www.reuters.com/article/us-israel-natgas-court-idUSKCN0WT0J6
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High Court rejects Israel’s natural gas plan – YNET

The gas deal signed by Prime Minister Benjamin Netanyahu last December with US and Israeli gas companies to develop Israel’s offshore gas deposits is rejected by High Court on the grounds that the ‘stability clause’ is unconstitutional.

Talam Yahav 03.27.16

Israel’s High Court rejected Sunday afternoon Israel’s natural gas plan which Prime Minister Benjamin Netanyahu signed last December with US and Israeli gas companies to develop Israel’s offshore gas deposits.

The judges rejected the “stability clause”, and since it is a prerequisite for the plan – the whole plan was thus rejected. The stability clause was supposed to allow the government or the Knesset to not change the plan for a period of ten years. It was meant to serve as protection from regulatory changes in taxation, antitrust limitations and export quotas. With the exception of Noam Solberg, four of the five justices ruled that the stablity clause was illegal.

Nevertheless, the state was given a period of one year during which it could fix any problematic aspects of the deal. At the end of that period of time, if a deal is not worked out, the plan will be cancelled.

Deputy Supreme Court president Elyakim Rubinstein wrote: “The stability clause in this chapter of the plan, in which the government undertakes for a decade to not only not legislate but to also fight any legislation against the plan’s provisions, was determined without authority – and as such is rejected. It was determined in contrast to the general principle of administrative law regarding the prohibition of shackling the authority’s ability to judge. The government does not have the power to decide not to decide and not to act.”

Rubinstein added that this was especially the case when the government seeks to limit the judgment of the next government, “whose composition and ideology will be different than this one.” Rubinstein also stated that the stability clause substantially binds the Knesset’s ability to use its discretion.

The decision is a blow to Netanyahu’s stature, who for over a long period went to great pains to get the plan signed. Among other things, he showed up at the the High Court’s hearing on the subject and at one point even said, “You know me – when I want something, I get it.”

Netanyahu responded to the ruling by saying that “the court’s decision seriously threatens the development of gas reserves of the State of Israel. Israel is seen as a state in which excessive judicial intervention makes it difficult to do business with.”

Netanyahu tried to dampen the joy over the plans rejection adding that “of course nobody should be celebrating the fact that the gas may remain in the depths of the sea and hundreds of billions will not be distributed to Israeli citizens. We will search for other ways to overcome the severe damage caused to the Israeli economy following this surprising ruling.”

The case was brought to the High Court by a host of organizations, including Movement for the Quality of Government, The Israel Union for Environmental Defense, and the Labor and Meretz parties. The main arguments of the petitioners were against the decision-making process and the bypassing of the antitrust commissioner and the plan itself – the fact that the state has undertaken not to change it for ten years. The climax of the hearings occurred when Netanyahu came to the High Court in an attempt to persuade the judges to approve the plan. This is apparently the first time in the history of the High Court that a sitting prime minister came to defend the state’s position before the Court as opposed to government prosecutors.

Israel announced the discovery of sizeable offshore natural gas deposits about five years ago, and a partnership made up of Israeli and US companies began extracting gas.

After the antitrust commissioner determined last year that the gas companies’ ownership constituted a monopoly, a government committee reached a deal with the firms to break up their control and introduce competition.

Netanyahu received the Economy Ministry and the authority to sign the deal after a series of resignations and moves that removed all of the deal’s opponents from the way. Anti-trust commissioner David Gilo opposed the deal and resigned even before the plan was completed. Then-economy minister Aryeh Deri, who was asked to sign a clause bypassing the anti-regulator’s authority, refused and resigned as well, leaving the Economy Ministry back in the prime minister’s hands.

Israel’s Delek and Texas-based Noble Energy, which own a number of recently discovered gas fields that supply factories and Israel’s electric company, own Israel’s largest natural gas field, Leviathan.

http://www.ynetnews.com/articles/0,7340,L-4783787,00.html