A Short History of the Regulatory Natural Gas Framework in Israel | Natural Gas Europe

December 24th, 2015

Last week Israeli Prime Minister Benjamin Netanyahu signed Article 52 to the Israeli anti-trust law, enacting an article that enables the government to abolish competition in the Israeli natural gas market in order to improve Israel's energy security, security, and foreign relations interests. In doing so Mr. Netanyahu set a precedent; it was the first time Article 52 was enacted since the law was passed.

In recent times, the regulatory framework, known in Hebrew as the Mitveh Hagaz, became the most talked about topic in Israel. In certain circles of the Israeli public, mainly in the civil society, the framework has provoked outrage. For the last few weeks, rallies and demonstration have been held against its implementation in many cities and town around the country. The organisers, including NGOs and civil associations, tried to distance themselves from any political affiliation and identification. Politicians, although a few of them attended rallies and supported the framework's opponents, were not allowed to address the public from the podiums.

Netanyahu: Gas plan is vital to Israel's existence | Ynetnews

Netanyahu: Gas plan is vital to Israel's existence

PM argues the need to develop additional gas fields, revealing that Israel's power plants were hit with rockets in the past, and a lone gas rig could face a similar threat.
Roi Yanovsky, Yael Friedson

Published: 12.08.15, 13:40 / Israel News


Prime Minister Benjamin Netanyahu testified on Tuesday in front of the Knesset's Finance Committee, defending the government's natural gas plan.

Specifically, the prime minister was called to defend Clause 52, that enables the government to bypass the anti-trust regular's authority in approving the gas plan.

Netanyahu claimed in his testimony that the proposed plan was vital for the existence of the State of Israel, as it would ensure the country's energy security.

Prime Minister Netanyahu and Energy Minister Steinitz at the committee hearing
(Photo: Knesset Spokesman)

He disclosed that Israel's power plants were hit in the past by rockets launched by terror organizations, arguing that the development of additional gas fields is necessary to lower the threat on Israel's energy resources.

"Without supplies, we would not be able to operate electricity systems, and when electricity systems go down, they bring down the entire country. We've witnessed it during storms. People wouldn't be able to heat up their homes," he said.

"No one thought for a moment to put all of the country's power plants in one place," Netanyahu continued. "Imagine we join all the plants to one. Take, for example, the Hadera power plant. That place, like others, was hit by rockets. It is dangerous and irresponsible. The rockets are just going to become more advanced," he said.

During Operation Protective Edge in 2014 and Operation Pillar of Defense in 2014, terror organizations in the Gaza Strip tried to fire rockets at facilities of the Eilat Ashkelon Pipeline Company in southern Israel and at the Ashkelon power plant, and were able to hit the power plant several times.

The rocket fire at the Ashkelon power plant caused damage, but did not paralyze or significantly disrupt the plant's operations.

"The most vulnerable thing is the gas rigs, it's more vulnerable than a gas pipe because they can be hit by rockets. The plan is a way to create reserves and have several fields rather than have just one field that would be under threat and very dangerous," the prime minister explained.

He also asserted that "the natural gas provides Israel with a much stronger and sturdy base against international pressures," adding that there are already talks with Ankara about importing Israeli gas to Turkey.

Responding to claims from members of the committee that the plan would hurt competition in the natural gas market, Netanyahu said that "if we do not approve the plan, we'll remain without competition, without gas fields, without energy security and without the ability to export. I've seen supervision over prices, and that does not appeal to investors."

He warned of Israel becoming "a state of over-regulation," asserting that "the incessant interference gives the Israeli economy a bad name, and I'm not just talking about the energy sector."

Netanyahu took on the authorities of the Economy Ministry after Shas chairman Aryeh Deri, who refused to sign off on the clause bypassing the anti-trust regulator, had to resign from his role at the head of the ministry.

While Netanyahu was testifying, protesters against the gas plan gathered outside the Knesset, where the committee was holding its discussion, and outside the Prime Minister's Residence in Jerusalem, demanding the Knesset not to approve the plan.

Under the proposed gas plan, Israel's Delek and Texas-based Noble Energy, which own a number of recently discovered gas fields that supply factories and Israel's electric company, will continue to own Israel's largest natural gas field, Leviathan.

Leviathan, with estimated reserves of 22 trillion cubic feet (tcf), will take about 3-1/2 years to develop and is expected to supply billions of dollars of gas to Egypt and Jordan in addition to supplying Israel.

However, Delek - through its units Delek Drilling and Avner Oil Exploration - will have six years to sell its entire 31.3 percent stake in a second large field, Tamar, and Noble will have to trim its stake in Tamar to 25 percent from 36 percent.

The companies will also be forced to sell two smaller fields, Tanin and Karish, within 14 months.

Tamar, with reserves of about 10 tcf, began production in 2013 to supply the domestic market and is due to be expanded for export. Tanin and Karish hold a combined 3 tcf.

The government will set a price ceiling and the deal will remain unchanged for 10 years.

Reuters contributed to this report.


Source

Notes from the Knesset: US Interests and Regional Politics of Israel's Gas Framework | Natural Gas Europe

Dore Gold (Image Credit: Israel Ministry of Foreign Affairs)

December 05th, 2015

American interests are showing impatience due to the delay in the approval of the natural gas regulatory framework in Israel, representatives of the Israeli Foreign Office have argued during a hearing at the Knesset's (Parliament's) Economy Committee.

During proceedings, Dore Gold, the Ministry's Director General presented a paper, issued by the U.S. State Department, titled "Investment Climate Statement 2015." In that document, the State department expresses concern because of Israel's antitrust authority's decision not to exempt Noble Energy from Israeli antitrust law.

"Particularly concerning was the December 2014 announcement of Israel's Antitrust Authority (ATA) that it may declare that the U.S company developing Israel's offshore gas [Noble Energy] and its Israeli partners are party to an agreement in restraint of trade… This antitrust threat is having a chilling effect on further investment in the sector," the paper says.

In his testimony to the Economic Committee, Mr. Gold also spoke about relations with Jordan. Mr. Gold said a Letter of Intent (LoI) signed with the Jordanian electric company (NEPCO) was obtained as the Jordanian government took on a political risk. He said the export agreement, which will prevent export of Iranian natural gas to Jordan, was important for Israel as it could strengthen ties with Jordan.

"Securing of Israeli gas to Jordan is an Israeli strategic interest and a confidence building measure," said Mr. Gold. "Gas supply won't bring peace [though a peace treaty between Israel and Jordan was signed in 1994 and is still valid] but it has the potential to strengthen peace in the future."

Mr. Gold predicted that the Palestinian Authority will backtrack on its announcement from earlier this year, in which it cancelled an agreement to purchase natural gas from Israel, since it is lacking energy sources in its territory.

As for Europe, Mr. Gold said that European countries are interested in Israeli and Middle Eastern natural gas in order to diversify their gas resources. He said that due to the continuous turmoil in North Africa, security supply from that region was affected while Middle Eastern gas supply also can be a counterweight to the European dependency on Russian natural gas.

"If we are successful at developing Israeli gas, Cypriot gas and Egyptian gas, this quantity gives us utmost importance to European energy security," said Mr. Gold.

Mr. Gold also mentioned the U.S.'s role in the export agreements, saying that the U.S was "the main bridesmaid" in Israel's gas agreement with its neighbours.

When asked questions Israel-Egypt relations, Mr. Gold said those relations are complicated and multi-layered and that Israel has to look at the whole regional picture. He said that if Jordan does not get Israeli gas it might be supplied by Iran, when the Iranians will lay a pipeline that passes all across Iraq.

In order to clarify the gas agreement's political aspect, Mr. Gold said that "we don’t say that Israel [through gas agreements will] secure either Egypt's or Jordan's stability. If we can supply energy it is a good thing."

Ron Adam, a Foreign Ministry official, said that Jordan needs the gas in order to generate 50% of its electricity. He also said that the Director General of the Cypriot Foreign Ministry told him that the Europeans will also fund an interconnector between Cyprus and Europe following a feasibility study funded also by the Europeans.

"Natural gas is a strategic asset," said Mr. Adam. "Countries are waiting breathlessly for the framework's approval. The moment the framework's approval fails, Israel's image will be totally damaged".

Ya'acov Zalel

SOURCE

Experts Cast Doubt on Gas’ Role in Enhancing Israeli Regional Security | Haaretz

Experts Cast Doubt on Gas’ Role in Enhancing Israeli Regional Security
It emerges at Knesset hearings that government failed to alert cabinet 
and Knesset that Egypt may be on verge of second big gas discovery.

Avi Bar-Eli Dec 04, 2015 6:39 AM

Offshore Leviathan natural gas drilling site.Albatross

The debate over the strategic value of Israeli gas exports took a new turn Thursday after it emerged that the government knows that Egypt was likely to announce another significant new gas discovery, but failed to mention it in its latest assessment of the national security interests in exporting gas.

The Italian energy company Edison, which is completing a seismic survey in Mediterranean waters offshore Egypt, asked Israel to expand its study to Israel’s economic zone. But that information was never conveyed to the cabinet or the Knesset when the Foreign Ministry and National Security Council updated its national security assessment.

A second big natural gas discovery in Egypt could undermine efforts by the partners in Israel’s Tamar and Leviathan fields to export gas to the country, as well as the case that antitrust considerations should be overridden to speed development of Leviathan.

The discovery of major reserves at Egypt’s Zohr field in August has dashed hopes for exports, although last month the Egyptian company Dolphinus reached a preliminary agreement to buy Israeli gas.

News of the potentially big second discovery came as the Knesset Economics Committee held another day of deliberations over the gas framework, which spells out who can control the Tamar and Leviathan fields and other elements of Israeli gas policy. Prime Minister Benjamin Netanyahu, in his role as economy minister, plans to sign a waiver overriding antitrust concerns after the committee hearings, putting into place the element of the framework.

At Thursday’s meeting, most experts and officials called to address the national security issues cast doubt on the government’s claims that exports to Egypt or other regional markets were possible, or would enhance Israel’s security profile.

Led astray?
Zvi Mazel, a former Israeli ambassador to Cairo who revealed that information about the second field, noted that Zohr would likely begin production in 2017 and reach peak output in 2026, so that he was doubtful Egypt would be interested in Israeli gas.

“It’s clear we need to export gas, and as quickly as possible, but it is in our interest to understand what Egypt wants so that we aren’t led astray,” Mazel said. He noted that none of the agreements with Egyptian buyers had been signed or approved by the government.

“They hinted that they want to do business, but behind the scene they say they won’t do business with Israel, rather that private companies from Israel should do business with private companies from Egypt,” he said.

Dore Gold, the Foreign Ministry director general, told lawmakers that if Israel didn’t export gas to its neighbors, Iran would fill the vacuum.

“Exporting gas is an important opportunity to improve Israel’s strategic position and let us enter the exclusive club of energy exporters. It will advance Israel’s foreign relations, especially in our immediate circle, as well as vis a vis the United States and Europe,” Gold said.

He cited American impatience with the delays in having the gas framework approved and said they would deter other multinational energy companies from coming to Israel.

Gold also warned that Iran might be ready to export gas to Jordan through Iraq. MK Yael Cohen Paran (Zionist Union) questioned that assumption, noting that Islamic State posed a threat to energy infrastructure like a pipeline, but Gold said ISIS did not present a long-term threat.

But others were skeptical. Shelly Yacimovich (Zionist Union) said that since Egypt now had ample gas reserves it was a more likely exporter of gas to Jordan and that Israel’s energy reserves were far too small to make it a major player in energy markets. “Europe needs as much gas in one year as Leviathan’s entire reserves,” she said.

Jacob Perry, a Yesh Atid MK and former head of the Shin Bet security service, noted that Egyptian exports of gas to Israel were snagged by terrorist attacks on the pipeline delivering it, and then were abruptly cut off when Cairo cancelled the contract.

The preliminary agreements about gas exports to Egypt envision using that same pipeline, Perry noted. “Our experience with Egypt and the gas pipeline hasn’t been a stunning success and now they’re talking about reversing the flow through that pipeline. If we were able to export and contribute to stability, I would be in favor, but there are a few question marks here,” Perry said.

Alon Liel, a former director general at the Foreign Ministry, said political and defense issues were a more powerful force in the Middle East than business, citing the dispute between Russia and Turkey. “See how because one jet was brought down, Putin is ready to give up on $30 billion of trade with Turkey,” he said. “The agreement with Egypt isn’t strategic but economic. “

Avi Bar-Eli
Haaretz Contributor


Source: http://www.haaretz.com/israel-news/business/.premium-1.690031

Consultant: Big Gas Discovery Off the Coast of Egypt to be Announced | NATURAL GAS EUROPE

December 03rd, 2015 Ya'acov Zalel 

Edison, the Italian energy company, a subsidiary of France's EDF, will announce in the near future the discovery of a new big gas field in Egyptian territorial waters, Zvi Mazel, a former Israeli diplomat and a former ambassador to Egypt has said.

Mr. Mazel revealed this information (yet to be confirmed by Edison) when he testified in front of the Knesset Economy Committee during its hearings on the natural gas regulatory framework in Israel. Mr. Mazel, currently a freelance consultant, based his information on data from GlobalData, an information and research organization.

The assertion was not accepted as fact by all at the Committee hearing. Later in the hearing Mr. Mazel's revelation was rejected by Ron Adam, an official in the Israeli Foreign Ministry.

Noble Energy deal moves company closer to Israel offshore project | Houston Business Journal

David Stover, CEO & COO
Noble Energy Inc.

Noble Energy deal moves company closer to Israel offshore project
Nov 23, 2015, 2:18pm CST

by Suzanne Edwards Reporter, Houston Business Journal

Houston's Noble Energy Inc. (NYSE: NBL) advanced its march toward developing and expanding massive gas fields off the coast of Israel, known as Leviathan and Tamar, despite having faced regulatory pushback from Israel's antitrust regulators.

The independent oil and gas exploration and production company on Nov. 23 announced the sale of its 47 percent stake in the Alon A and Alon C licenses for offshore Israel, which include the Tanin and Karish fields.

David Stover is the president, CEO and COO of Houston-based Noble Energy Inc. (NYSE: NBL), which has reached a new benchmark in its quest to develop a massive gas field off the coast of Israel.

Selling the Tanin and Karish fields was one of the requirements stipulated in the framework agreement that Israeli officials approved in September, which, once honored in full, will pave the way for Noble's development and operation of the Leviathan project.

"The sale of these assets is an important step in realizing the government of Israel’s goal to bring in a new operator to develop these natural gas fields, which will compete for sales with Tamar and Leviathan," Noble Energy said in comments emailed to the Houston Business Journal. "Tamar and Leviathan are, and will remain, operated by Noble Energy."

Noble came close to selling its stakes in Leviathan before canceling the nearly $1 billion sale to Australia's Woodside Petroleum Ltd. (ASX: WPL) in May.

Noble sold its stakes in the Alon A and Alon C licenses to Israel-based Delek Group Ltd. for a deal valued at $73 million. That's slightly less than the $78 million the company had reportedly invested in Tanin and Karish as of Sept. 30, according to its third-quarter earnings report. The deal also accomplishes transferring the responsibility of selling the Tanin and Karish fields squarely to Delek Group, which the company sees as expediting the process of meeting the framework agreement requirements, said Noble.

Tanin and Karish must be sold to a third party as per the framework agreement. The still-remaining elements of the agreement include Noble downsizing its stake in the Tamar gas field to 25 percent. As of February, the company stake in Tamar was 36 percent.

More imminent is Noble's meeting the requirement that it consult with Israel's Knesset Economic Committee, which the company said in its emailed comments would be completed in the coming weeks.

Once Leviathan comes online, the framework agreement also stipulates that the prices at which Noble sells the gas it yields must be capped for domestic customers, the Times of Israel reported.

"With a framework in place, Noble Energy can move forward with reconvening project and execution teams, completing negotiation of gas sales contracts to regional customers that have been waiting for clarity on Noble Energy’s ability to deliver natural gas in a timely manner, and securing the external financing necessary to enable a final investment decision," Noble said in its emailed comments. "With the framework in place now, Noble Energy anticipates making (final investment decisions) by the end of 2016."

"It will take approximately three and one-half to four years from FID for construction and field development before first production commences from Leviathan," Noble went on to say.

The announcement of the sale was accompanied by the announcement of Noble inking a farm-out agreement with BG International Ltd., a subsidiary of London-based BG Group PLC. Under the terms of the farm-out agreement, BG will acquire a 35 percent stake in the Block 12, which includes the Aphrodite natural gas discovery, off the coast of Cyprus for a total cash consideration of $165 million. Noble Energy will continue to operate Block 12 with a 35 percent stake, according to a statement the company released announcing the agreement.

Suzanne Edwards covers energy for the Houston Business Journal. Follow her on Twitter for more. 

Source: http://www.bizjournals.com/houston/blog/drilling-down/2015/11/noble-energy-deal-moves-company-closer-to-israel.html

Israel's Natural Gas Regulatory Framework Is Set For Approval By Mid-December | Natural Gas Europe

November 17th, 2015

ISRAEL'S NATURAL GAS REGULATORY FRAMEWORK IS SET FOR APPROVAL BY MID-DECEMBER

A new regulatory framework for the natural gas industry in Israel is set to be approved by mid-December following a series of hearings.

The hearings have been scheduled by the Economic Committee of The Knesset (the Israeli Parliament) and will entail a intense, rigorous series of debates and discussions about the framework.

The schedule for the hearing was published Monday by the committee chairman, Eitan Cabel. Mr. Cabel has set an intensive two-and-a-half week of hearings from 22 November to 10 December, five days a week, four hours each session.

Mr. Cabel has summoned the country's top politicians, regulators, and professionals and representatives of the monopoly partners, Delek Group and Noble Energy, to give evidence before the committee. The final decision of the committee is not binding.

Top among those who were summoned is the prime minister, Benjamin Netanyahu, and Energy Minister Yuval Steinitz. Among those summoned to testify are the state comptroller, the governess of the Bank of Israel, and the former anti-trust authority chief, who prompted the current crisis when he refused a year ago to approve any exemption from the anti-trust law to the natural gas monopoly.

Other interesting summons include the chiefs of Israel's security organizations: the Chief of Staff of the Israel Defense Forces (IDF), the head of the Mossad secret service, the head of the Shin Bet internal security service and the chief of military intelligence. Those security services' chiefs' testimonies will be heard behind closed doors.

Mr. Cabel also asked for numerous documents and papers from various bodies ahead of the sessions, including the protocols of various ad-hoc committees that dealt with natural gas issues, companies' presentations, financial reports, opinions relating to the country's gas prices, and a legal opinion that justifies the monopoly's exemption from anti-trust law on the ground of national security.

Although the list of demands by the committee chairman is quite exhaustive, it is not clear if he has the authority to force those summoned to testify.

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Source: http://www.naturalgaseurope.com/israel-natural-gas-regulatory-framework-approval-date-december-26430

Knesset to ratify Cyprus sea border agreement | Globes

Knesset to ratify Cyprus sea border agreement

The new law defines Israel's maritime Exclusive Economic Zone as stretching to a distance of 200 miles from the coast.

17 December 13 11:55, Yuval Yoaz

The agreement between Israel and Cyprus regarding their maritime border and Exclusive Economic Zones for offshore operations will be enshrined in Israeli law. A memorandum entitled "Maritime Zones Law" has been distributed today by the Ministry of Justice.

This is a preliminary memorandum, which includes a basic model for Knesset legislation to clarify the laws pertaining to maritime Exclusive Economic Zones (EEZ) and its aim is to set the legal framework for activities supervised and encouraged by the State of Israel at sea. The main operations in this context are natural gas exploration and its production and oil exploration.

The Law defines territorial waters and the EEZ which stretches to a distance of 200 miles from Israel's coastline. The Law is being formulated in accordance with international law and the Convention of the Law on the Sea, even though Israel is not a party to this convention.

In the Red Sea region Israel only has territorial waters and no EEZ.

Published by Globes [online], Israel business news - www.globes-online.com - on December 17, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

Link to source: http://www.globes.co.il/serveen/globes/docview.asp?did=1000902267