When natural gas was discovered several years ago off the shores of resource-poor Israel, it was heralded as nothing short of a miracle. But an emerging deal with developers has been plagued by criticism, with opponents accusing Prime Minister Benjamin Netanyahu of caving to a monopoly. After long negotiations, a government committee has struck a deal with the firms, which aims to break up their monopolistic control of Israel's gas reserves and introduce competition while maintaining incentives for fresh investment. But opposition Knesset members and environmentalists say the deal would squander a national treasure. Netanyahu has held firm, and on Thursday welcomed the approval of the deal by the Diplomatic-Security Cabinet. "We are promoting a realistic solution that will bring natural gas to the Israeli market and not a populist solution that will leave the gas in the depths of the earth," Netanyahu said. "This dismantles the monopoly and will bring in the coming decades hundreds of millions of shekels for education, welfare, health, and for every Israeli citizen." A statement released on Thursday by the Prime Minister's Office said, "The [Diplomatic-Security Cabinet] today unanimously decided that, at this time, it is of decisive importance to move quickly to develop and expand the natural gas fields that have been discovered off Israel's coasts, out of concern for state security and the foreign relations of the State of Israel." National Infrastructure, Energy and Water Minister Yuval Steinitz (Likud) told Israel Hayom, "We've made history. After years of delays, we've now opened the path for the state to benefit from around $100 billion in revenue over the next 30 years. We will get energy security and create real competition. The [deal] is not just good, it's very good." A partnership between two firms, Texas-based Noble Energy and the Israeli Delek Group, is the main developer at Israel's two main gas fields, Tamar and Leviathan. It also owns two smaller reserves discovered recently. The firms have been selling gas to the Israeli market from the Tamar field, which went online in 2013, and have agreed to sell to neighboring countries as well. The heftier Leviathan field, the largest gas field in the Mediterranean, has not yet been developed. Israeli environmentalists and opposition MKs have pushed for more competition in developing Israel's offshore gas, saying it would lower prices and encourage local industry to use the environmentally friendly resource. But Israel's own antitrust commissioner has said the emerging deal would not provide for real competition, and resigned in protest last month. While Israel's finds are minimal compared to gas giants Russia, Iran or Qatar, they are more than enough for the country's domestic needs and would enable it to reduce its reliance on costlier and dirtier oil and coal. Nearby Cyprus has also become newly resource-rich, and Israel's other neighbors may discover their own deposits. Israel has just the world's 38th largest supply of proven natural gas reserves, according to the CIA Factbook. But Israel hopes its proximity to Middle Eastern and European markets could make it a regional player. The U.S. ambassador to Israel has called on Israel to create incentives to attract international gas developers. Under the deal approved by the Diplomatic-Security Cabinet, Delek must sell its entire share of Tamar, and Noble Energy must sell most of its holdings, within six years. Delek must sell its holdings in the two smaller gas fields within 14 months. The forced sales are aimed at opening the industry to competitors. The deal also sets a price ceiling for future sales to Israeli companies and commits the gas firms to complete the development of the Leviathan gas field by 2019. "I think it's a reasonable deal," said Eytan Sheshinski, an economist who served as an adviser to Israel's energy minister in negotiations with the gas partnership, and headed a 2011 government committee that determined gas firms must pay 60% of their profits to the government. Sheshinski said the deal would break up the "dominant monopolistic position" of the Delek-Noble partnership, while also ensuring that the Leviathan field will be developed, which he said had been in doubt due to plunging global oil and gas prices. The government was concerned that uncertainty and a drawn-out debate could scare away gas companies. But critics say the deal might in fact strengthen the gas monopoly, because the companies will maintain a de facto monopoly over the Tamar field for the next six years before entering a similar partnership to develop the Leviathan field. Zionist Union MK Shelly Yachimovich, who has been a leading opponent of the deal, told Army Radio that the two smaller gas fields, to be open to new investors, will not add much competition. "The emerging deal does not bring even one achievement to the public," Yachimovich said. "Netanyahu caved completely." The Diplomatic-Security Cabinet vote on Thursday determined that the gas deal should be considered a matter of national security. Geopolitical concerns hang in the balance, as Israel plans to export natural gas to Egypt, Jordan and the Palestinian Authority. But critics said there were ulterior motives at work. According to Israeli law, the Diplomatic-Security Cabinet's ruling that the deal is crucial to Israel's national security or foreign relations means that the government can overrule any objections by antitrust authorities. Zionist Union leader Isaac Herzog on Thursday called on Knesset Speaker Yuli Edelstein on Thursday to ensure that the deal is debated in the Knesset. Zionist Union MK Tzipi Livni said, "We should not sidestep the position of the antitrust commissioner. It should not be in the shadows of the cabinet. There should be an open debate on this topic." Meretz leader Zehava Galon said, "It appears that all means are legitimate when it comes to selling state treasures to greedy tycoons." Yesh Atid MK Haim Jelin said, "The real discussion is not about gas or the state's natural resources, but rather about who is taking care of the citizens and protecting the public's interests." The gas deal will soon be presented for public objections and must be approved by the government before it is enacted.
