Israel withdraws vote on new gas regulations as objections mount

By ALISA ODENHEIMER
Bloomberg

Israeli Prime Minister Benjamin Netanyahu was forced to withdraw a proposed parliamentary vote meant to unjam his government’s plan to develop its natural gas reserves, in a stinging sign of his political weakness.

Netanyahu called back Knesset from its summer recess on Monday to try to move forward on the government’s proposed regulatory framework for the gas industry. But he failed to marshal enough backing for a crucial motion to empower cabinet to override the antitrust commission’s objections to the blueprint, and that vote was scrapped.

“We have one more obstacle left, but when I want to achieve something, I achieve it,” Netanyahu said, according to a text message. “We have one more obstacle left, and we will overcome it.”

The authority to override the antitrust commission currently resides with Economy Minister Aryeh Deri, who has declined to exercise it. Because Netanyahu’s coalition controls just 61 of parliament’s 120 seats, his ability to push through legislation over the heads of resistant coalition partners has been hampered.

“I don’t think it is a sign that there is a danger to the durability of Netanyahu”s government. Narrow governments, as long as they have a majority, tend to be more durable,’’ said Abraham Diskin, a professor of political science at The Hebrew University of Jerusalem. “But you have a problem of day-to-day functioning.”

The Tel Aviv Oil & Gas Index was down 2.1% at 5:30 p.m.

Treading Water

“The antitrust regulator still has to be overruled, and that has not happened,” said Noam Pincu, an analyst at Psagot Investment House in Tel Aviv. “We are still in the same place, without having moved in the right direction.”

Earlier Monday, parliament approved the plan in a non- binding show of support.

The proposed policy was reached in negotiations with Texas-based Noble Energy and Israel’s Delek Group, principal owners of the country’s two biggest gas fields, Tamar and Leviathan. Critics, including former antitrust commissioner David Gilo, who resigned in protest over the arrangement, say the proposal damps competition and prices the gas too high for domestic consumers.

The government says the proposed gas plan would attract new investors to explore and develop offshore fields, speed exports to regional neighbors including Jordan, and pump billions of shekels of taxes and royalties into the economy.

Speedy Implementation

“We call on the government to speedily implement the policy so we can proceed with the development of Leviathan and expansion of Tamar,” Noble said in an e-mailed statement after the parliament session.

Under the the arrangement, Noble would have to reduce its stake in Tamar, Delek must sell all of its interests in the field, and both companies will have to sell off two smaller gas sites, Karish and Tanin. The framework establishes a price ceiling and an indexing mechanism to regulate gas prices, and sets milestones for the companies’ development of the fields.

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