Israel Supreme Court Rules Against Offshore-Gas Deal
March 27 2016 - 8:02PM
Dow Jones News
By Orr Hirschauge and Rory Jones
TEL AVIV--Israel's Supreme Court on Sunday ruled against a
landmark deal to develop and export the country's offshore gas
reserves, a setback for Prime Minister Benjamin Netanyahu, who
campaigned for it.
The panel of judges called the deal unconstitutional, citing a
clause in its framework that gave energy companies pricing and
regulatory stability for 10 years regardless of potential shifts in
the government.
The main stakeholders in the fields, U.S.-based Noble Energy
Inc. and Israeli partner Delek Group, had argued that the stability
clause was required for them to make the investments necessary to
develop the fields.
The deal will be suspended for one year, the court said. Mr.
Netanyahu's government will be required to amend it during that
period and potentially put the details to a vote in the Israeli
parliament, known as the Knesset.
Israel's regulator ruled the plan anticompetitive in 2014,
saying Noble and Delek held a monopoly.
The energy companies have already been through several rounds of
regulatory and legislative hurdles that have significantly delayed
development. In total, Israel sits on fields with more than 32
trillion cubic feet of gas.
"The supreme court's resolution severely threatens the
development of Israel's gas reserves. Israel is seen as a country
with exaggerated legal interference that makes doing business
hard," Mr. Netanyahu said on his official Twitter account. "We will
seek alternative ways to overcome the serious harm inflicted on
Israel's economy by this hard to understand resolution."
Delek and Noble issued a joint statement with other companies
involved. "In its resolution the court accepted the framework in
whole, opposing only the stability clause. We congratulate such a
resolution," it said. "We call upon the government to put into
place terms that include stability in a timely fashion."
The deal hasn't been popular domestically. Thousands of Israelis
protested the deal in the past year, complaining it would line the
coffers of big business, offer Israeli consumers uncompetitive
pricing compared with other Western countries, and send too much
gas outside Israel, an energy-security risk.
In December, Mr. Netanyahu signed off on the deal, invoking an
antitrust clause for the first time to force it through on grounds
of national security.
The Israeli leader said the development of the gas reserves
would enable Israel to develop economic ties with countries such as
Jordan, Egypt, Cyprus, Turkey and Greece, a diplomatic boon and a
critical measure for national security.
In response to Mr. Netanyahu's decision, opposition lawmakers
filed a petition in the court that objected to the plans to
circumvent the regulator. Mr. Netanyahu appeared before the court
in February to defend his move, the first ever appearance there by
a sitting prime minister.
Write to Orr Hirschauge at Orr.Hirschauge@wsj.com and Rory Jones
at rory.jones@wsj.com
(END) Dow Jones Newswires
March 27, 2016 19:47 ET (23:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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