Gov't delaying Leviathan development
The foot-dragging in approving a gas pipeline terminal and allowing gas exports has prevented the gas field's development.
29 October 13 19:12, Amiram Barkat
Almost three years have passed since the Leviathan natural gas discovery, but there has still be no official announcement of a discovery. Leviathan's rights holders - Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE:DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) - have not yet received a lease from the government to allow them to develop the gas field.
To obtain a lease, the rights owners must present a development plan for the field, but they cannot do so because the government has not yet decided where the terminal for the gas delivery will be located.
Regulatory progress in Israel's planning and building commissions is among the slowest in the world, while the developers rush ahead. The main challenge facing the Netanyahu government is the construction of a gas pipeline terminal from Leviathan, 130 kilometers offshore, on a 100-dunam (25-acre) onshore site.
Prime Minister Benjamin Netanyahu has instructed Prime Minister's Office director general Harel Locker to personally supervise this critical project. Since 2010, the planners have been able to obtain provisional permits to carry out detailed examinations of two sites, one adjacent to the Meretz sewage treatment site at Emek Hefer, and the other adjacent to the Hagit power station at Yokne'am. Local residents at both sites have been waging an effective public campaign against the plan, demanding that the handling of gas be carried out at offshore facilities.
The target date for approving the National Outline Plan - Gas Terminal was August 2013. As of now, no approval seems likely before August 2014. The government needs four years to approve a 100-dunam natural gas terminal. In the same period of time, energy exploration companies discovered the Tamar field, developed it at a cost of $3.5 billion, and have contracts to sell almost all of the gas to the Israeli economy.
$125 million has already been spent on planning for Leviathan's development. Just last week, the green light was given for gas exports, when the High Court of Justice dismissed the petitions against the government's decision to export gas. A major question mark still hangs over exports: whether the government will levy a special tax on the exports component, which is not currently taxed. The issue has been under discussion for three months at the Ministry of Finance and Israel Tax Authority.
Meanwhile, Leviathan's developers are blocked from selling gas to the domestic market. For two years, Antitrust Authority director general David Gilo has been examining whether Leviathan is a cartel, and until a decision is made, it will not be possible to sell Leviathan gas to Israeli customers.
Published by Globes [online], Israel business news - www.globes-online.com - on October 29, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
Link to article: http://www.globes.co.il/serveen/globes/docview.asp?did=1000889597
