The impact of Israel’s high court gas decision

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The impact of Israel’s high court gas decision
 © In-Cyprus 2019
Israel’s High Court ruled on March 27 that the gas regulatory framework deal struck between the government and Noble/Delek, partners in Israel’s Leviathan field, is illegal, as its central piece, the stability clause, is unconstitutional.

The stability clause was meant to ensure that, over a 10-year period, future governments do not enact regulatory changes in taxation, antitrust limitations and export quotas that undermine this deal. It is difficult to invest $6-7 billion in the 620 billion cubic metres (bcm) Leviathan field if the rules keep changing.

This saga started in late 2014 when the Israeli antitrust commissioner challenged the Natural Gas Outline Plan, agreed upon by the government and the Noble/Delek consortium, on the basis that the consortium constituted a monopoly.

The deal

A gas deal was subsequently agreed and officially activated on December 17, 2015 after Prime Minister Benjamin Netanyahu signed a controversial legal clause enabling the framework to move forward.

Approval of the deal was meant to be Netanyahu’s glory.  He made this the centerpiece of his gas policy, claiming the development of Leviathan would bring energy security to Israel, help its neighbours and bring in billions of dollars in tax revenues. But many critics said the deal favoured Noble and Delek.

There was huge disagreement within the country about whether the 10-year rule was wise, as in the future there may be a new government which may not want to be bound by this government’s decision. During the Court hearing Netanyahu actually said: “We are in the last minute in terms of our ability to realise the potential of the State of Israel’s gas… every additional delay… could lead to grave results and it is doubtful if we could recover from them”.

High Court decision

The Court ruled: “The government has illegally departed from [the boundaries] of its discretion”.

In a four-to-one vote, the justices specifically ruled against the...

This article was automatically added to our system 3-4-2016

The impact of Israel’s high court gas decision

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