Israel’s Supreme Court on Sunday ruled against a landmark deal to
develop and export the country’s offshore gas reserves, a setback for
Prime Minister Benjamin Netanyahu, who campaigned for it.
The panel of judges called the deal unconstitutional, citing a clause in its framework that gave energy companies pricing and regulatory stability for 10 years regardless of potential shifts in the government.
The
main stakeholders in the fields, U.S.-based Noble Energy Inc. and
Israeli partner Delek Group, had argued that the stability clause was
required for them to make the investments necessary to develop the
fields.
The deal will be suspended for one year, the court said.
Mr. Netanyahu’s government will be required to amend it during that
period and potentially put the details to a vote in the Israeli
parliament, known as the Knesset.
Israel’s regulator ruled the plan anticompetitive in 2014, saying Noble and Delek held a monopoly.
The
energy companies have already been through several rounds of regulatory
and legislative hurdles that have significantly delayed development. In
total, Israel sits on fields with more than 32 trillion cubic feet of
gas.
"The supreme court’s resolution severely threatens the
development of Israel’s gas reserves. Israel is seen as a country with
exaggerated legal interference that makes doing business hard,” Mr.
Netanyahu said on his official Twitter account. "We will seek
alternative ways to overcome the serious harm inflicted on Israel’s
economy by this hard to understand resolution.”
Delek and Noble
issued a joint statement with other companies involved. "In its
resolution the court accepted the framework in whole, opposing only the
stability clause. We congratulate such a resolution,” it said. "We call
upon the government to put into place terms that include stability in a
timely fashion.”
The deal hasn’t been popular domestically.
Thousands of Israelis protested the deal in the past year, complaining
it would line the coffers of big business, offer Israeli consumers
uncompetitive pricing compared with other Western countries, and send
too much gas outside Israel, an energy-security risk.
In
December, Mr. Netanyahu signed off on the deal, invoking an antitrust
clause for the first time to force it through on grounds of national
security.
The Israeli leader said the development of the gas
reserves would enable Israel to develop economic ties with countries
such as Jordan, Egypt, Cyprus, Turkey and Greece, a diplomatic boon and a
critical measure for national security.
In response to Mr.
Netanyahu’s decision, opposition lawmakers filed a petition in the court
that objected to the plans to circumvent the regulator. Mr. Netanyahu
appeared before the court in February to defend his move, the first ever
appearance there by a sitting prime minister.
(Wall Street Journal)