The Israeli government hopes to jump start development of a massive natural gas field in the Eastern Mediterranean, ending an extended period of delays.
The government of Israeli Prime Minister Benjamin Netanyahu approved of a new deal for the Leviathan gas field over the weekend, a field that Noble Energy and Delek Group are poised to develop. At issue was a prior pledge from the Netanyahu government, which gave the energy companies a guarantee that they would not be hit with any regulatory or pricing changes for ten years. Israel’s Supreme Court invalidated that clause in March, calling it unconstitutional. Noble Energy warned that the court ruling could delay development. Related:The Wildest Predictions For Oil Prices In 2016
To comply with the court’s decision, the latest deal removes that controversial provision. But the Netanyahu government also included language in the deal that could lead to compensation to the companies if regulation changes in the future. “This is an important milestone in creating a stable investment environment," Noble Energy said in a statement.
“The new version gives future government space to judge whether to change policies in the field of natural gas, should this be required," Finance Minister Yuval Steinitz said in a statement. Related: Argentina Makes Good On Debts With These Energy Giants
Noble Energy and Delek Group intend to produce natural gas from the Leviathan field, with the hopes of bringing production online by 2019. Development has suffered several years of delays due to regulatory uncertainty. The Leviathan promises to provide gas to Israel, but also gas for export to Jordan and Egypt. The Israeli public has pushed back on the deal, arguing that the government is doing too much to protect the gas companies, at the expense of consumer prices.
Meanwhile, Italian oil giant Eni is moving quickly to develop a competing gas field off the coast of Egypt. The massive Zohr field is one of the largest discoveries ever recorded in the Mediterranean. Eni is fast-tracking the project, which could allow it to beat Noble Energy to the punch, bringing a major source of gas to the region.
By Charles Kennedy of Oilprice.com
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