Special to WorldTribune.com
Israel’s High Court on March 27 rejected Prime Minister Benjamin Netanyahu’s offshore gas development deal signed last December with U.S. and Israeli companies.
The ruling was a major setback for U.S.-based Noble Energy, which could delay the firm’s $6 billion natural gas project off the coast of Israel for as much as a year. The project was expected to start up in 2019.
Four of the five judges on the High Court agreed the “stability clause” in the deal was illegal. The stability clause was created to allow the government or the Knesset to not change the plan for a period of ten years as protection from regulatory changes in taxation, antitrust limitations and export quotas.
Israel’s government was given a period of one year to fix any problems in the deal. At the end of that period of time, if a deal is not worked out, the plan will be canceled.
Netanyahu responded to the ruling by saying that “the court’s decision seriously threatens the development of gas reserves of the State of Israel. Israel is seen as a state in which excessive judicial intervention makes it difficult to do business with.”
The ruling is “disappointing and represents another risk to Leviathan timing,” Noble CEO David Stover said in a written statement. Noble shares dropped 7.4 percent in early trading on March 28.
“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,” Stover said. “Noble Energy has consistently maintained that stability is a minimum condition for project development, and our position has not changed.”
Stover didn’t say exactly how the company would defend its rights to the Leviathan, but said the government must quickly “deliver a solution which at least meets the terms of the framework.”