Putting an end to nearly a year of squabbles that all but froze the nation’s natural gas sector, Prime Minister Benjamin Netanyahu on Thursday signed a legal clause to activate the sector’s long-disputed framework agreement.
While the gas framework in question – a deal aimed at settling disagreements between the developers and the government – received cabinet approval in August, the plans faced additional hurdles after failing to receive the approval of the antitrust commissioner.
Fully realizing the gas deal ultimately required that the economy minister – a role currently being filled by Netanyahu – invoke a legal clause to circumvent the commissioner’s objections – Article 52 of the Restrictive Trade Practices Law (1988).
“We came, today, to provide gas to Israel, to the Israeli economy, to the Israeli citizens,” Netanyahu said at the signing ceremony held at the Neot Hovav Industrial Park in the Negev. “The gas that was given to us as a gift from God found in the deep sea where we were given enormous gas reserves. They potentially transform us not just into an energy power, but certainly into an important international energy force with a very great capability – and we need to extract them.”
Although the prime minister signed off on Article 52 on Thursday – and thereby fully activated the gas outline – the deal may face additional hurdles prior to being implemented.
Opposition leader Isaac Herzog made clear on Thursday that the Zionist Union intends to submit a petition to the High Court of Justice, arguing against Netanyahu’s employment of the legal clause.
“Signing off on the gas outline by means of Article 52 means using the name of Israel’s security in vain,” Herzog said at an event at the Interdisciplinary Center Herzliya.
“This is a cynical exploitation of security needs and serves interests that do not benefit the Israeli public. The Zionist Union faction will petition the High Court in the near future, with the goal of stopping this crooked process, in order to preserve the Israeli economy and restore the rights of the Israeli public.”
The necessity to employ Article 52 arose due to the refusal of then-antitrust commissioner David Gilo to support the outline. Gilo, who resigned in August over the issue, said the terms of the deal would stifle competition in the country’s natural gas sector. His successor likewise has refrained from backing the outline.
While Article 52 has never been implemented before, an economy minister can do so by citing national security or foreign policy interests.
After economy minister Arye Deri resigned from the position last month, Netanyahu gained the authority to activate the clause.
Before invoking Article 52, Netanyahu was required to conduct consultations with the Knesset Economic Affairs Committee, which ultimately involved 11 sessions of discussions on the subject among politicians and professionals in the sector.
Although the conclusions of the committee were not legally binding, its members voted by a narrow majority on Monday to recommend against Article 52’s activation.
Seven committee members from the opposition voted against recommending its use while six committee members from the coalition voted in favor.
Following the vote, Economic Affairs Committee chairman Eitan Cabel (Zionist Union) accused Netanyahu of holding the consultations simply as a “procedural formality.”
On Wednesday, Cabel sent a letter to Netanyahu on behalf of himself and the committee members who had objected to Article 52’s use, outlining the reasons they felt he should not activate the clause.
“We were not convinced that at this time, as well as in the foreseeable future, that there are reasons of foreign policy and security that justify such an extreme measure as an administrative exemption from the law’s commands in the hands of the economy minister, while the supervision of monopolies and restrictive trade practices should be carefully controlled, in the manner determined by the Antitrust Law,” the letter said.
Regarding the Economic Affairs Committee consultations, Netanyahu expressed his disappointment on Thursday that the sessions became “a political and populist discussion.”
“The outline is essential; essential to our security because we do not want to stay with one power plant that is fired at, and we do not want to stay with one field and rig that are fired at; we want multiple rigs,” the prime minister said.
“There is no chance to develop large gas fields – Leviathan [offshore west of Haifa], the additional rigs that we would like – without the gas outline. This is the only chance.”
Also at the signing ceremony on Thursday, Netanyahu discussed his “triple vision” regarding the natural gas framework.
His first vision, he explained, involves reaching a situation in which Israel has 10 million people earning $50,000 annually each – achieving a gross national product of half a trillion dollars.
A second vision described by Netanyahu entails continuing to strengthen the Negev, which requires large investments and advancements in the private sector, while a third vision was of reducing social gaps and improving the education, welfare and health of Israelis.
“For these three visions, we must provide gas,” he said.
Netanyahu stressed the importance of engaging with Israel’s neighbors in the gas sector, particularly with Cyprus, Jordan, the Palestinian Authority, Turkey and Egypt.
“This is important to us – this is important to the economy, this is important to security, this is important to society, this is important to our foreign relations, and so we had to overcome the entire populist debate that took place here,” the prime minister said.
The country’s prominent gas developers, which were party to the negotiations over the past year – Houston-based Noble Energy and Delek Group subsidiaries Delek Drilling and Avner Oil Exploration – applauded the signing of Article 52.
“The natural gas framework establishes the regulatory certainty and stability necessary to proceed with development of both the Tamar expansion [also west of Haifa] and Leviathan while providing transparency for future domestic pricing and natural gas competition in Israel,” a statement from Noble Energy said, referring to the already online Tamar basin and the yet-to-bedeveloped Leviathan reservoir.
“The development of Leviathan will substantially expand Noble Energy’s capacity to deliver gas to Israel and the region, as well as provide a second source of domestic natural gas supply and redundancy of infrastructure for the people of Israel,” the statement added.
Noble Energy has already taken steps to move forward with Leviathan’s development and Tamar’s expansion, aiming to conclude external financing agreements required to reach final investment decisions by the end of 2016, the company said.
A statement from Delek Drilling and Avner Oil Exploration similarly expressed the Israeli firms’ commitment to developing Leviathan and expanding Tamar.
“The gas discoveries are the future growth engine of the Israeli economy and will lead to revenues of hundreds of billions of shekels for the benefit of the country’s citizens,” the statement said. “The gas industry has lost precious years due to regulatory delays, but Israel today decided democratically – we must give gas to the Israeli economy.”
Nonetheless, stumbling blocks may still stand in the way of fully realizing the gas plans. In addition to Herzog’s announcement that the Zionist Union intends to file a High Court petition, others have already submitted such appeals.
Before Thursday’s ceremony, the Israeli Forum for the Preservation of Beaches had, in a lastditch effort, submitted a petition to the High Court, demanding a temporary order to stop the prime minister from signing Article 52.
Meanwhile, on Thursday afternoon, Meretz chairwoman Zehava Gal-On announced that her party also was submitting a petition to the High Court regarding the use of Article 52. The petition, likewise, requests that the High Court issue a temporary order to stop the activation of the natural gas outline until a final ruling on the petition.
Article 52 is intended to be used only under emergency circumstances or “situations of absolute necessity” when the resultant damage by not invoking the clause would be dramatic, the petitioners explained. Despite encountering countless emergency circumstances throughout its history, Israel has never made use of Article 52, they continued.
“The prime minister’s decision is tainted by extraneous considerations, fabricated security pretexts and extreme unreasonableness,” Gal- On said.
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