Gas decision is the right solution for all citizens of Israel, PM says

“We are promoting a realistic solution that will bring natural gas to the Israeli market and not a populist solution that will keep the gas deep underground.”

By
June 26, 2015 01:29
Hadera

A man points as he stands on a tanker carrying liquified natural gas, ten miles off the coast from Hadera. (photo credit: REUTERS)

 
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Although government officials stood by their decision to advance the natural-gas compromise deal through the security cabinet on Thursday, members of the opposition slammed the move as capitulation to corporate demands.

Members of the security cabinet unanimously deemed the natural-gas issue a matter of national security, enabling a compromise outline formulated by government officials and the natural-gas companies to move to the full cabinet for final authorization. The fate of Israel’s gas resources has been in question since December 2014, when Antitrust Commissioner David Gilo announced that he would be examining whether the stronghold of the Delek Group and Noble Energy in the sector constitutes a “restrictive agreement.”

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“We are promoting a realistic solution that will bring natural gas to the Israeli market and not a populist solution that will keep the gas deep underground,” Prime Minister Benjamin Netanyahu said at the Israel Air Force’s pilots course graduation at Hatzerim Air Force Base, which took place right after the cabinet meeting.

“After years of discussions, after years of arguments, I’m sure that this is the wise solution, the right solution and the solution required for all citizens of the country,” he added.

Justice Minister Ayelet Shaked also voiced her support for the decision, noting that although the forthcoming compromise “is not a perfect arrangement, it is good for the citizens of Israel and serves our geopolitical interests in the Middle East and in the entire world.”

Prior to the decision, opposition leader Isaac Herzog (Zionist Union) demanded that Knesset Speaker Yuli Edelstein (Likud) bring the gas issue before the Knesset rather than the confines of the security cabinet.

“This decision will have implications for future generations,” Herzog wrote on his Facebook page, following a conversation with Edelstein. “I reiterate my demand for the prime minister to bring the gas outline before the Israeli Knesset.”



Herzog argued that a decision of this magnitude cannot occur “behind closed doors,” and demanded that Edelstein “use his moral and political authority to make sure that this will happen.”

According to Herzog, Edelstein responded that the issue does mandate a plenary discussion and he promised to take the request seriously.

Many opposition MKs also found fault with the activation of Article 52 of the Antitrust Law, which was a prerequisite to the security cabinet’s decision on Thursday.

By instituting Article 52, the government exempted the antitrust commissioner from interfering in a “restrictive agreement” due to reasons of foreign policy or security.

While the article has never before been activated, the rights to institute the clause fall under the authority of the economy minister. However, Economy Minister Arye Deri transferred those rights to activate Article 52 to the government on Thursday.

Regarding this article, Economic Affairs Committee chairman Eitan Cabel (Zionist Union) claimed on Thursday morning that a national security exemption could not be made without his approval, citing the article’s text, which reads: “The minister may, after consultation with the Economic Affairs Committee of the Knesset, exempt restrictive arrangements from the provision of this law, all or in part, if he considers this necessary for reasons of foreign policy or national security.”

After the vote, Cabel praised Deri for being courageous in his decision not to activate Article 52 itself. However, he said he sent an urgent appeal to the Knesset legal adviser regarding the government’s responsibility to consult with the Economic Affairs Committee due to the transfer of powers.

“Netanyahu will have to come to the committee and explain why he is not maintaining the interests of the citizens of Israel, and instead favors the interests of the gas tycoons,” Cabel added.

Prof. Brenda Shaffer, an expert on energy policy in the University of Haifa’s School of Political Science and a visiting researcher at Georgetown University, found fault with the stances of both the government and the opposition.

As far as the move to label Israel’s natural gas an issue of national security and foreign relations is concerned, Shaffer maintained that in this case “the geopolitical connection is minor.”

In part, the government chose to take this path because the natural- gas companies have signed a few full-fledged export deals and a number of preliminary letters of intent for gas export with government bodies and companies located within Jordan and Egypt.

Nonetheless, Shaffer argued that there are no indications that all of the preliminary letters of intent will necessarily become real agreements.

In addition, although Jordan urgently needs electricity and water due its ongoing humanitarian crisis, she said its needs could be satisfied through direct sales of those commodities, rather than through natural gas.

“The whole legal and public premise that there’s a geopolitical urgency is a bluff,” Shaffer continued.

“Gas and oil trade doesn’t build peace, doesn’t build political relations. It reflects peace, it reflects political relations.

“The whole basis of the discussion, of why they are trying to do it so quickly, is wrong.”

Rather than be a bridge to peace, she argued that hydrocarbon trade actually could cause problems if there are supply disruptions.

“The only geopolitical justification would be that both Jordan and Egypt are friendly governments with problems right now,” she said. “That’s the only geopolitical argument that I think is justified. But, even then, you could sell water and electricity to Jordan.”

While Shaffer disagreed with the government’s decision, she also criticized the opposition’s position on the issue of competition.

Stressing that the Zemach Committee – which led to a government decision on gas-export quotas in June 2013 – already went through an arduous process of determining regulations, Shaffer said there was no reason to begin disputes about the resource yet again.

“Competition is impossible in a small market,” she said. “Why would you throw away the months of learning and studying due to the competition issue?” Because Karish and Tanin are very small reservoirs and not of commercial interest, they likely only would be developed as a backup rather than as a competitive resource, Shaffer explained.

Meanwhile, by the time Leviathan is developed, Tamar’s output will already have reached its peak, she added.

“There’s never going to be a real competition,” Shaffer said.

“There are only two fields and one anchor buyer – the Israel Electric Corporation.”

Dr. Amit Mor, CEO of the Eco Energy Financial and Strategic Consulting firm, said he supports the security cabinet’s decision, stressing the need to develop Leviathan, Karish and Tanin as quickly as possible “for national security reasons.”

“The delays for the past few years caused by disputed regulations may cause damages to the economy in some billions of dollars,” Mor said, adding that any technical disturbances to Israel’s sole Tamar supply source could have damaging ramifications.

“In such a case, both the Israelis and Palestinians might sit in the dark for long periods,” he said.

“There is a crucial need to settle the regulatory disputes and come out with an agreed upon development scheme that will also enable the export of gas, which is necessary to finance the Leviathan field, to generate meaningful revenues to the government and to [supply] national funds for the use of future generations.”

As far as the foreign policy implications are concerned, Mor stressed that as long as a chance to export gas to liquefaction plants in Egypt exists, such a possibility must be exercised.

“Right now there is a window of opportunities,” he said.

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