Israel To Compensate Producers Following Ruling - Minister
Yuval Steinitz, Israel energy minister, said on April 4 that the Leviathan Partnership partners are the big winners of last week's ruling by the High Court of Justice which annulled the stability clause in the regulatory natural gas framework for the Israeli gas market.
Annulment of the stability clause on March 27 represented a setback to the government as well as to US investor Noble Energy.
Speaking at the 8th National Energy Conference held in Tel Aviv, Steinitz said that following the ruling the government will have to compensate the energy companies for the rejection of the stability clause: "There are several ways to resolve these problems: guarantees to the companies or to the banks that will finance the projects."
Steinitz added that the government might not use the stability clause but will reserve the right the right to offer the energy companies compensation: "Unfortunately it is going to be a better deal to the companies, unless it will be a complete failure and everything will be abandoned. We were reluctant to give them [guarantees] and now we are forced by the High Court of Justice to give them more, not less than before. But we shall find the ways to develop it. It will be irresponsible to abandon it."
Amir Levi, head of the budget department in the Treasury, presented an opposite approach to Steinitz's, saying that the energy companies have to accept the Court's ruling and start developing Leviathan and implementing the framework. "The High Court of Justice approved 90% of the framework," Levi said. "It's time for the companies to understand that we live in a country in which there is a judicial system which produced a clear ruling. It is time for the companies to show maturity and responsibility and to understand that the framework has been approved."
Yossi Abu, the CEO of Delek Drilling and Chairman of Avner, both being partners in the energy monopoly in Israel, said that apart from the stability clause, the High Court of Justice approved 90% of the framework. However, the Court has recognised the stability's importance for the development of those projects. Abu said that the companies are now advancing development of the projects but still have to agree on the stability issue. He said that the companies don’t look for neither incentives nor improving their positions.
"We will do everything so that gas will be flowing to the local market by 2019," Abu said. "We are implementing the framework. Just give us stability so we will be able to develop."
Ya'acov Zalel