Israel to Approve New Stability Clause May 22
The Israeli government is expected to approve May 22 a resolution to the stability clause, a crucial article to the natural gas regulatory framework, that the High Court of Justice struck down at the end of March. The regulatory gas framework should govern the Israeli natural gas industry. The disqualification of the stability clause has plunged the Israeli natural gas industry into yet another crisis.
According to the resolution draft, the article's title will be changed from "stable regulatory environment" to "existence of regulatory environment that encourages investments." Under this title, there are changes that should placate the High Court of Justice but weaken the legal position of the energy companies.
According to the draft clause, neither the government nor the parliament would be barred from changing laws and regulations governing the gas industry. In the original framework, it was proposed that the authorities would not be allowed to change regulations, including taxation and export quotas, for up to 15 years.
Another setback to the gas producers is that the government will not block proposed legislation that could harm the industry. Instead, and in case of a regulatory change that might affect profitability, the regulators will review the new conditions within five months and decide on a compensation package if it will be justified by other factors in comparison to the situation in similar projects in OECD member states.
The new article was formulated during a few meetings between regulators and the energy companies. Noble Energy said that its representatives did take part in consultations with government officials but said in a press release it has not given up on any of its legal rights and it will continue to work together with the government in order to bring the gas from Leviathan to the Israeli market as early as possible. Delek did not respond to NGE's question.
Yuval Steinitz, the energy minister, said in press release that following intense work a new article was formulated in accordance with the court's principles. He expressed the hope that now the development of Leviathan would be continued and a new round of tenders for oil and gas exploration in Israel's territorial waters will be held soon.
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