Photo Credit: Flash 90
A view of the Israeli 'Yam Tethys' natural gas processing rig.

In response to Israel’s Supreme Court’s ruling Sunday, which struck down the portion of the government contract with Noble Energy and the Delek Group that would have blocked future Israeli governments from issuing regulatory changes to the contract for 10 and 15 years to come—the “stability clause” Netanyahu had promised the energy companies— Noble Energy’s Chairman, President, and CEO David L. Stover noted that “Noble Energy has consistently maintained that stability is a minimum condition for project development, and our position has not changed. As we have stated before, we will vigorously defend our rights related to our assets to protect shareholder value. 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.”

Stover said in a statement Sunday night that Israel’s Supreme Court’s ruling on his company’s deal with the Israeli government “while recognizing that timely natural gas development is a matter of strategic national interest for Israel, is disappointing and represents another risk to [off-shore natural gas field] Leviathan timing.” Stover noted that “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.”

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As The Jewish Press reported Sunday, Israel’s Supreme Court on Sunday accepted some of the petitions against the Netanyahu government’s natural gas outline which included development and exploitation of the country’s newly discovered off-shore deposits by Texas-based Noble Energy and Israel’s Delek Group, in order to guarantee them stability in return for their massive investments.

The court ruling means the entire signed deal is suspended until the Knesset has a chance to review and amend the law. The court gave the Netanyahu government one year to fix the clause, or the deal would die.

Israel’s energy minister Yuval Steinitz (Likud) said that the Supreme Court made an “unfortunate decision” in blocking the government’s plan to develop the offshore natural gas fields, warning it could cause irreversible damage to Israel’s energy sector. “The decision’s negative consequences on the development of the gas market, on energy security, on the Israeli economy and on the lost revenue for the state of Israel and its citizens, could be very tough, and even irreversible,” Steinitz said in a statement.

At this point it is unclear whether Netanyahu would be able to fix the stability clause in the current political reality of the Knesset.

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9 COMMENTS

  1. If private energy companies are going to insist on certain governments providing them with protection against any and all possible harm where does this end. Risk is risk there should be no guarantees of any kind. Perhaps Trump should be consulted and allowed to negotiate a deal with another company. Giving in to threats is not always the solution. I agree with the Supreme Court decision.

  2. I think there is a fear of energy companies becoming to powerful and influencing keneset members with money and threats. Nobody in Israel wants Israel to be america. Understand as well that all Texas oil companies are owned, controlled or heavily influenced by the Busch family who is an American x president.

  3. Roc Diaz I'm not sure what you are talking about when you say that "there is a fear of energy companies becoming to powerful….." Do you mean financially? In either case your comment about the Bush family owning all the oil companies in Texas is totally without merit. Do you realize how many oil companies there are in Texas? The point of this decision by the Supreme Court was to eliminate the possibility of the Keneset from going out on a limb to guarantee the success of the oil companies. There could be so many unintended consequences.

  4. They need to go back to the negotiating table with better lawyers. Maybe the "stability" clause can be remedied with an option to extend the investment at a predetermined rate or the new government can pay back the investors at a predetermined profit rate. That way the company wouldnt be a victim of political wind changes.

  5. Its not a good deal for the current elected government, which has a limited term of power, to decide what future governments will decide. This , however, happens all the time with one government borrowing money increasing the national debt for for future generations to pay it back.

  6. Tor Marquis I do not understand your statement "one government borrowing money" ? Where does it say anything about Israeli Government involved financially? Only states that the company wants some protection from rule changes before they invest a huge some of money.

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