The Economic Affairs Committee, headed by MK Eitan Cabel (Zionist Camp), continued on Thursday its deliberations on the government`s agreement with energy companies for the distribution of natural gas from Israel’s offshore fields.
Foreign Ministry Director-General Dori Gold briefed the committee on the potential effects of the development of natural gas on Israel`s foreign policy, which he said would be apparent only after a number of years. ”The development of Israeli gas presents an important opportunity to improve the country`s strategic standing and allow the country entrance into the prestigious club of energy exporters,” Gold said, adding that ”a delay in igniting the process will cause damage to Israel`s interests.”
According to him, there is an agreement of intent with Jordan to export electricity to the Hashemite Kingdom`s electric company, ”but failing to develop the gas and blocking the export of Israeli gas to Jordan would not be beneficial to the relations between the countries. The gas would help Jordan deal with the refugee problem and move towards growth.”
Among the terms of the outline are requirements that Delek Group and Noble Energy sell their two smaller natural GAS reservoirs Karish and Tanin in 14 months, with Delek completely exiting the Tamar basin in six years and Noble diluting its assets there. The document also establishes some pricing schemes and includes clauses for ensuring stability in the sector. Delek and Noble are able to fully remain in the larger Leviathan reservoir, where development has been frozen due to the ongoing negotiations.
Fully implementing the outline now requires that the economy minister invoke a legal clause to bypass objections of the Antitrust Authority. Following former economy minister Arye Deri’s resignation, it became Prime Minister Benjamin Netanyahu’s duty as economy minister to consult with the Economic Affairs Committee prior to activating that clause – known as Article 52.
Director-General Gold said implementing the deals to export natural gas was crucial also due to Iran`s intention to export gas to Jordan through a pipeline in Iraq. Iran has recently signed a deal to double the amount of gas it exports to Iraq, Gold informed the committee.
Israel, he argued, has an interest in securing the supply of gas to the Palestinian Authority. ”I don`t believe the gas will bring peace with the Palestinians, but it could bolster a future peace,” he said.
”The development of the Leviathan field will be a key element in the development of relations with Cyprus and Greece. In Europe there are [serious] energy problems. The sources in North Africa are threatened by the expansion of al-Qaeda`s activities. The Russian gas and the crisis in Ukraine are also having an effect, and Europe realizes that it must diversify the continent`s energy sources,” Gold explained.
He further told the committee that Israel`s image as a country that attracts investments has been tarnished due to the delay in the development of the natural gas fields. ”Economic stability and attracting investors is a strategic and diplomatic interest of the utmost importance. Another delay may lead to the departure of companies that operate in this field in Israel,” he warned.
Ron Adam, the Foreign Ministry`s special envoy on energy, said ”we want to be in the gas exporters` club in addition to the gas producers` club, and there is a fear that we will no longer be relevant.” He told the committee that during the 21st Conference of the Parties (COP 21) of the United Nations Framework Convention on Climate Change, which was recently held in Paris, the Egyptian representative asked him: ”So, when can we get gas from you?”
Committee chairman Cabel said ”activating Article 52 is not something that can be taken lightly, and the question is whether we will get a new Middle East after it is activated.” In response, Gold said Jordan would seek an alternative supplier if it will not have enough natural gas for desalination and other purposes. ”When I see signs that the Iranians, following the nuclear agreement – with international support to tighten economic relations with the West – are talking about exporting gas to Iraq and to the West, this is something I have to take into consideration.”
MK Yael Cohen Paran (Zionist Camp) said the committee must ask to review all of the information that was at the government`s disposal before it approved the natural gas framework deal. ”I have a feeling that the information that is being brought before the committee is partial,” she said. Gold said the committee has received even more information than the government was privy to. In response, Cohen Paran said: ”With all due respect to the story about the Egyptian representative, I think the cabinet should receive reports that are more serious. We are not arguing about the need to strengthen ties with Jordan, but for this you do not need the outline. How do the Egyptians view the fact that we want to sell them gas in order to preserve their stability? Are they not a little bit offended? We are concerned with the energy-related interests of Europe, but what about our interests?”
Adam said ”50% of Jordan`s electricity will be produced from Israeli gas, and that is what we are aiming for. There is no doubt that for the Jordanians it is a matter of stability. In April 2016 we are scheduled to begin supplying gas to Jordan, but it all hinges on the outline.”
MK Shelly Yachimovich (Zionist Camp) criticized the briefing of the Foreign Ministry officials and said, ”Egypt doesn`t need our gas, and in any case it will be transferred there only as a transit station en route to Europe. Jordan`s alternative is not Iran, but Egypt. The transfer of gas from Iran to Jordan through ISIS [strongholds] is unrealistic.”
In response to Yachimovich`s comments, MK David Bitan (Likud) said both Egypt and Jordan are seeking to sever economic ties with Qatar, ”a leading supporter of global terror.” He added: ”I do not understand the Left. You say we should give up Judea and Samaria and the Western Wall for peace, but economic relations are important, and there is an opportunity to strengthen them, yet you object. In Israel there are two or three companies that discovered gas, and this is why there is a monopoly. We are not like the United States; there is no room for comparison. Take off the earplugs.”
MK Yaakov Perry (Yesh Atid) said he also attaches great importance to the stability of Egypt and the Palestinian Authority, ”but if Israel does not pursue a diplomatic process, everything we are saying here is meaningless.”
”If there would have been enough gas for us to export and thus contribute to stability, I would have voted in favor [of the outline], but there are a few more question marks here, and I would expect that balance and prioritization would have a place in the briefings of the Foreign Ministry and the National Security Council,” he said.
Former Israeli ambassador to Egypt Zvi Mazel told the committee that Israel ”must reach an agreement with Egypt and Cyprus in order to build a pipeline to Europe, but things are not entirely clear. We have an interest in understanding what Egypt wants and in not being deceived. Egypt wants to work with us for money and other advantages.” Mazel said a joint pipeline can lead to stronger relations with Egypt. ”We have to begin working as quickly as possible in order to cooperate with Egypt on the supply of gas to Europe, because Egypt is already working, and its `Zohr` field will begin to supply gas as early as 2017, and will reach full capacity in 2026,” he stated.
Asked by MK Dov Khenin (Joint List) about the Egyptian public`s attitude towards doing business with Israel, Mazel said ”there is a basic hatred towards Israel… But this does not stop Egypt`s governments, who take other interests into consideration, from reaching agreements and cooperating with Israel. The government understands that it needs to work with Israel, and the industrial sector also wants to work with us, but the media continues to be against us, as are the intellectuals and the public, and we have a problem here.”
Alon Liel, a former director general of the Ministry of Foreign Affairs and former ambassador to Turkey, said the Arab-Israeli conflict and the presence of ISIS in the region ”have made diplomatic and security issues much more dominant than economic issues.” One incident on the Temple Mount for example, ”will dictate economic affairs,” he argued. ”One incident in which Turkey downs a Russian plane – and Putin is ready to give up 32 billion dollars in trade with Turkey. Sixty percent of the gas Turkey imports is Russian, and Putin is willing to jeopardize this. We live in a region where these motifs are dominant.”
”There is an exceptional economic opportunity, but it will not bring peace, nor will it bring calm. Therefore, it should be put in perspective, and I am not devaluing the economic opportunity,” Liel said.
MK Bitan added that ”no one said [the gas outline] was a strategic opportunity; it is an opportunity to improve our foreign relations and reach Europe, via Egypt. In order to do this we need to develop the Leviathan gas field, and the outline is the only way to develop Leviathan. Therefore, we should activate Article 52.”
Dror Strum, the former head of the Antitrust Authority, told the committee that ”words such as `possibility`, `opportunity` and `chance for improvement` are not a good enough reason to bypass the existing supervision mechanism. The question that needs to be asked is whether the outline prevents the creation of monopolies. The partnership in Leviathan was not authorized by the director of the Antitrust Authority or the court, and it would not have been authorized in any court in the western world. All these explanations should have been presented during a normal and proper procedure at the Antitrust Tribunal.”