Israeli High Court Strikes Down Noble Gas Deal 

Marking a significant setback for gas exploration in the Eastern Mediterranean, Israel’s high court struck down a deal between the government and a U.S. consortium led by Noble Energy NBL -0.65%.

Citing the deal’s “stability clause” as cause for concern, the court argued that the current deal would lock in future governments into the agreement, which has been criticized as too generous to the energy firms involved.

According to Reuters, the government had committed not to change gas industry regulations until 2025 to allow for the deal to move forward.

According to media reports, the consortium, which included Noble , local firm Delek Group and other smaller actors, included an agreement to spend $1.5 billion over the next two years to develop the Leviathan gas field.

However, the court decided that the current government is in no position to establish such a long-term plan, which could prohibit future leadership from amending agreement in accordance with evolving pressures and market demands.

While relatively new, the Eastern Mediterranean’s discovery of offshore natural gas has transformed the region’s energy landscape over the last five years. While the offshore discoveries have been claimed by a number of regional neighbors, Israel and Cyprus have made the most progress in exploiting the resources, with Egypt moving quickly to develop an even more recent “super giant” discovery off its shores.

With the decision expected to push back the planned start of the gas field development, the court’s decision elicited an expected pushback from government officials who had advocated for the agreement.

“The (court) decision’s negative consequences on the development of the gas market, on energy security, on the Israeli economy and on the lost revenue for the state of Israel and its citizens, could be very tough, and even irreversible,” said Energy Minister Yuval Steinitz.

Ultimately, the court granted some relief in the form of a year-long delay of the ruling, allowing the country’s parliament to change the agreement to address concerns and resubmit it for review.

Source: Forbes

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