Israel has announced it has struck a deal with Texas-based Noble Energy for the exploitation of natural gas reserves in the eastern Mediterranean, ending months of uncertainty arising from a dispute over the control of the offshore Leviathan gas reservoir.
Last December former Israeli antitrust authority chief David Gilo decided to break-up Noble Energy’s joint monopoly with Israel’s Delek Group over the offshore Leviathan gas reservoir after declaring the consortium an illegal cartel.
The energy partners had also previously sued the state of Israel for some $15 million over a disagreement from November 2014 with the Israeli Infrastructures, Energy and Water Ministry regarding the payment of royalties to the government.
On Thursday, however, the government announced that Noble Energy and their Israeli partner Delek Group will be allowed to maintain control of the Leviathan reservoir in exchange for giving up their assets in the nearby Tamar reservoir.
"The agreement will bring in hundreds of billions of shekels [tens of billions of dollars] to Israeli citizens over the coming years," Israeli Prime Minister Benjamin Netanyahu said in a statement on Thursday, adding that the agreement will be presented to the Israeli cabinet on Sunday.
Netanyahu, who last week won the backing of Israeli central bank chief Karnit Flug for the proposed deal, also said he expected the cabinet ministers would approve the plan, which will see the Noble-Delek consortium invest $1.5 billion into developing the reservoir over a period of two years.
The consortium of Noble Energy and Delek subsidiaries own 85 percent of the Leviathan reservoir, which is one of the largest offshore gas reservoirs discovered in the last 10 years with 22 trillion cubic feet in reserves.
Together the companies say they have so far invested about $6 billion in Israel and had planned to spend another total of $6.5 billion to develop the Leviathan reservoir.
Israeli Energy Minister Yuval Steinitz hailed the deal, saying “there is a reasonable chance that further discoveries are waiting to be made."
However, Greek Cypriot gas expert Charles Ellinas told the Cyprus Mail the consortium now has to look for foreign buyers in order to make such proposed investments feasible, as the reservoir is too big for domestic consumption alone.
According to Ellinas, the gas can be channelled to Egypt through a pipeline where it will be turned into Liquefied Natural Gas (LNG), exported to the European market in pipelines through Turkey, or combined with reserves off the island of Cyprus and then exported as LNG to Europe.