Court rejects part of Leviathan framework

Plans to develop giant Leviathan natural gas field offshore Israel suffered another setback on Mar. 27 when the High Court of Justice rejected part of a regulatory framework supported by Prime Minister Benjamin Netanyahu (OGJ Online, Feb. 15, 2016).

The court said the agreement’s “stability clause”—which guarantees the government won’t make major regulatory changes for 10 years—required an alternative legal mechanism. It gave the government 12 months to solve the problem.

The court affirmed the rest of the regulatory framework allowing development of Leviathan field and expansion of nearby Tamar gas field to proceed. The framework received Cabinet approval last August but encountered antitrust resistance, which Netanyahu overrode after naming himself economy minister to secure the needed authority.

“The court’s ruling, while recognizing that timely natural gas development is a matter of strategic national interest for Israel, is disappointing and represents another risk to Leviathan timing,” said David L. Stover, president and chief executive officer of Noble Energy Inc., the Leviathan and Tamar operator.

“Development of a project of this magnitude, where large investments are to be made over multiple years, requires Israel to provide a stable investment climate.”

Noble estimates resources at 22 tcf in Leviathan field and 10 tcf in Tamar, which produces about 800 MMcfd. Both fields are in deep water.

Netanyahu called the court ruling “a grave threat to the development of Israel’s gas reserves” and said it aggravated an image of Israel “as a country with exaggerated judicial involvement in which it is difficult to do business.”

He said he hoped the main parts of the gas framework would survive, indicating he will push the government to resolve the stability-clause issue.

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