Netanyahu, Steinitz present revisions to natural gas compromise outline

A day after reaching an agreement with the country’s natural gas developers, Prime Minister Benjamin Netanyahu and National Infrastructure, Energy and Water Minister Yuval Steinitz presented the revised terms of the compromise outline on Thursday.

The new document, whose additions focus on pricing schemes, development of the Leviathan reservoir and governmental stability, will be brought to the cabinet for ministerial approval on Sunday.

“There is every reason to adopt this outline,” Netanyahu said at a press conference in his Jerusalem office on Thursday.

“I will submit this outline to the cabinet on Sunday. I am certain that we will pass it by a large majority, and rightly so, and we will move forward with it for the benefit of the Israeli economy and Israel’s citizens.”

The compromise outline is the result of more than six months of negotiations, which began after Antitrust Commissioner David Gilo’s December announcement that he would review whether the market dominance of Delek Group and Noble Energy constituted an illegal “restrictive agreement.”

After initial negotiations concluded, the National Infrastructure, Energy and Water Ministry released a draft version of the outline’s terms to the public on June 30.

For the past few weeks, officials have been working on revising these terms as well as ensuring that the natural gas companies would agree to the new conditions set forth.

As far as gas prices are concerned, Steinitz explained that the government would be offering two options. The companies would be obliged to set their price at level determined by the existing Oil Refineries Ltd. contract, which is currently the lowest in Israel’s gas sector, he said. This would lead to a $5.10 per mmBtu (million British thermal units) price within a few months – linked to the international market price of benchmark Brent crude oil, he added.

Electricity producers – including industrial plants that generate power for themselves – would pay natural an average of the three cheapest contracts of today, those of independent power producers OPC Rotem Ltd., Dorad Energy Ltd. and Dalia Energies Ltd. By the beginning of 2016, the gas price would cost about $4.70 per mmBtu, with linkage to market changes, Steinitz said. Continue reading…

(Photo: Netanyahu and Steinitz present the revised gas deal’s terms. Credit to Amos Ben Gershom/GPO).

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