07 September 2015, News Wires – Israel’s parliament reportedly gave its approval on Monday to a pact that would pave the way for development of the giant Leviathan offshore gas field, though significant regulatory hurdles remain.
In a non-binding Knesset vote, lawmakers voted 59 to 51 in favour of an outline plan that would allow Leviathan to be developed by a consortium led by US independent Noble Energy and Israel’s Delek Group, Reuters reported.
However, for the government and companies to move forward with the framework agreement, which was opposed by the competition regulator, parliament still needs to approve a measure that transfers power to override the regulator from the Economy Ministry to the Cabinet.
It was unclear when such a vote would take place since Prime Minister Benjamin Netanyahu may not have the support of enough of his coalition partners to drive through such a move. Economy Minister Aryeh Deri has said he wants to wait until a new regulator is in place.
Netanyahu has pushed hard for the deal despite objections of the regulator, who resigned over the matter, that Noble and Delek would hold most of Israel’s natural gas reserves.
The companies also own large stakes in the Tamar field, which started production in 2013 and has reserves of 10 trillion cubic feet.
At 22 Tcf, Leviathan was initially slated to begin production in 2018 with most of the gas earmarked for exports, but that will likely not be the case.
Noble in a statement urged Israel’s government to implement the deal as quickly as possible. “After final approval we can complete the required export contracts, rebuild the work teams… and raise the external financing needed,” it said.
Monday’s vote, which could be aimed at preventing Noble from seeking international arbitration, comes just a week after Italian energy group Eni said it had found 30 Tcf of gas with the Zohr discovery off Egypt, muddying the waters for Israel’s gas sector.
As part of the deal initially reached in June, Noble and Delek would be allowed to retain ownership of Leviathan but would be required to sell off their interests in the Karish and Tanin gas discoveries.
In addition, Noble would have to reduce its stake in Tamar and Delek would have to sell its share in the producing field.
Critics say the deal still leaves too much of the gas reserves in the hands of Noble and Delek, which could keep prices high.