Leviathan ruling risks sinking gas project

THE future of the huge Leviathan gas field in Israeli waters has once again been cast into doubt after the country’s Supreme Court objected to the terms of its development.

The field – which promises to transform Israel into a regional exporter of energy – has faced a series of ups and downs as authorities have railed against the details of the deal struck with US developer Noble Energy.

On Sunday, the court opposed a portion of the deal that prevents changes to regulations affecting the project for ten years, and has given the government a year to find an alternative legal mechanism to provide regulatory stability.

The field’s development has been beset with delays since it was discovered in 2010. Competition authorities ruled in 2014 that the deal gave Noble Energy too much power over the country’s gas supplies. Israeli prime minister Benjamin Netanyahu renegotiated that deal, agreeing that the project partners sell energy assets in Israel, but this deal has now been rejected by the court.

Netanyahu hit out the latest decision, bemoaning that the appearance of 'excessive judicial interference' makes it difficult to do business, and warning again that such delays threaten the future of the project.

'Certainly nobody has any reason to celebrate that the gas is liable to remain in the depths of the sea and that hundreds of billions of shekels will not reach the citizens of Israel,” he said. “We will seek other ways to overcome the severe damage that this curious decision has caused the Israeli economy.'

Noble Energy CEO David Stover agrees that the decision is another risk to Leviathan’s future.

'Development of a project of this magnitude, where large investments are to be made over multiple years, requires Israel to provide a stable investment climate,' he said.

'It is now up to the government of Israel to deliver a solution which at least meets the terms of the framework, and to do so quickly.'

Noble Energy has agreed preliminary deals to export the gas from Leviathan to Egypt and Jordan. The field was considered the largest in the Mediterranean Sea until Eni made a massive discovery of its own last year.