NBL Noble Energy Inc

By Orr Hirschauge and Rory Jones 

TEL AVIV--Israel's Prime Minister Benjamin Netanyahu on Sunday approved an amended deal to develop the country's natural-gas fields after months of legal wrangling that has stunted the growth of the domestic hydrocarbon industry.

Israel's highest court in March ruled against an initial framework agreement to develop the country's offshore fields. It called the deal unconstitutional, citing a clause in the agreement 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.

Mr. Netanyahu on Sunday said the clause had been removed from the amended framework. An Israeli official said the government had added another clause that said the gas companies would be potentially compensated for any future changes in regulation.

"The important thing now isn't to delay," Mr. Netanyahu told his weekly cabinet meeting.

The new deal gives Noble and Delek the green light to develop Israel's largest offshore field and export the natural gas to new markets such as Jordan, Turkey and Egypt, potentially deepening ties between Israel and its regional neighbors.

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 containing more than 32 trillion cubic feet of gas.

"This is an important milestone in creating a stable investment environment," Noble Energy said in a statement.

Israeli officials say they hope the new framework won't face any more legal or regulatory hurdles after the deal became highly unpopular domestically.

Thousands of Israelis have protested the deal in the past year, complaining it would line the coffers of big business. Israeli consumers say it offers uncompetitive pricing compared with other Western countries and sends too much gas outside Israel, an energy-security risk.

"Instead of furthering the interests of Israeli citizens...the government swiftly approves a framework that takes care of the interests of the gas tycoons," Yossi Dorfman, one of the activists opposing the deal, said Sunday.

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 its neighbors and strengthen national security.

In response to Mr. Netanyahu's decision, opposition lawmakers filed a petition in Israel's highest 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

May 22, 2016 12:05 ET (16:05 GMT)

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