by Neil Sandler, Platts
June 25, 2013 (TSR) – Israel’s Supreme Court has given the government 15 days to respond to an appeal by four Knesset members and four environmental and political organizations against the government’s authority to decide on the export of offshore gas reserves, the Supreme Court said late Monday.
The appeal was presented by three Knesset members from the opposition and one from the Likud Party of Prime Minister Benjamin Netanyahu. The appeal demanded that any decision on exports be made by the Knesset and stated that the government decision on Sunday to permit the export of 40% of offshore reserves was based on incorrect data.
The Knesset Economics Committee also met late Monday in emergency session to demand that Prime Minister Netanyahu retract the decision and transfer authority on the matter to the Knesset — Israel’s parliament.
In a statement issued after a stormy debate the committee chairman Knesset Member Avishay Braverman said: “It was impossible to apprehend that a decision of historic proportions is not being taken by the Knesset.”
On Sunday, the Israeli cabinet approved a proposal to allocate 60% of the country’s offshore gas reserves for the domestic market and 40% for export.
The vote was 18 in favor and three opposed. The 40% allocation for export was reduced from a 53% recommendation by a government appointed committee last August.
Several last minute changes were made to the joint proposal agreed to last week by Prime Minister Benjamin Netanyahu, Energy and Water Minister Silvan Shalom, Finance Minister Yair Lapid and Bank of Israel Governor Stanley Fischer.
The volume to be set aside for the domestic market through 2040 would be 540 Bcm and any exports to neighboring countries, including Jordan and the Palestinians, would come out of the export quota and not from the domestic allocation. Gas from the Tamar offshore field, which began commercial production in late March, could be sold immediately to Jordan. Export terminals could be built at sea. The Tamar consortium will commit to installing additional compressors to increase the delivery of gas to the local market by the end of 2015 and a pipeline to Ashkelon by the end of 2016.
In addition, the tax structure for gas exported would be presented by Finance Minister Lapid within 120 days instead of 90 in the original proposal.
Speaking at the cabinet meeting Prime Minister Netanyahu said “without export there will not be sufficient gas for the domestic market.” He added that the proposal strikes the right balance between the domestic and export markets and “does not give in to the populist wave that is currently sweeping the country.”
The prime minister was referring to the strong opposition by various environmental and political groups to gas exports and demanded that the controversial issue be decided in the Knesset and not by the government.
The three cabinet ministers who voted against the proposal demanded that the volume set aside for the domestic market be increased to 600 Bcm. The proposal approved will increase taxes on exports by producers and require more infrastructure improvements.