JERUSALEM -- Israel's High Court of Justice on Sunday struck down a deal that Prime Minister Benjamin Netanyahu reached in December to enable the development of a major offshore natural gas field.
The gas trove, called Leviathan, has the potential to transform Israel into an exporter of the fuel, but it has been plagued by delays.
The court specifically objected to a part of the agreement between the government and the project's developers, which are led by Noble Energy, that prohibits changes to regulations affecting the project for 10 years.
Justice Elyakim Rubinstein, the court's deputy president, said the government did not have the authority to make such a long-term deal, which would bind its successors, especially "when the issue at hand is a matter of real political controversy."
The court gave the government a year to work out an alternative solution, but that may lead to further delays in developing the field, which was discovered in 2010.
Noble Energy, based in Houston, has reached preliminary agreements to export gas from Leviathan to Egypt and Jordan. The Obama administration has enthusiastically supported these efforts in the hope that energy ties would help build peaceful relations between Israel and its neighbors in the Middle East.
David Stover, the chairman of Houston-based Noble Energy, said the ruling was "disappointing."
Plans to bring Leviathan's gas to market have been slowed by a series of roadblocks, including a decision in late 2014 by Israel's antitrust commissioner that Noble and its partners would have too much power over the Israeli energy market. That ruling led Netanyahu to devise a deal under which Noble and its partners would divest part of their Israeli holdings, but now the court has objected to that arrangement.
The Israeli government reacted with dismay to the court decision.
"The High Court of Justice decision severely threatens the development of the gas reserves of the state of Israel," Netanyahu said in a statement. "Certainly, nobody has any reason to celebrate that the gas is liable to remain in the depths of the sea and that hundreds billions of shekels will not reach the citizens of Israel."
Netanyahu also said Israel was "seen as a state with excessive judicial interference in which it is difficult to do business."
Eli Groner, director-general of Netanyahu's office, warned on Army Radio that "we are telling the world that Israel is a place where it is difficult to do business."
In recent years, a series of discoveries by Noble and its Israeli partners, the Delek Group conglomerate, have helped transform Israel from a country heavily dependent on energy imports to one with a growing natural gas industry. The companies operate a field called Tamar, whose gas is used to generate roughly half of Israel's electricity. Leviathan is twice the size of Tamar.
For many Israelis, however, the benefits of a surging natural gas industry are outweighed by concerns that Noble and its partners were becoming too powerful.
"The judges chose today to protect the separation of powers and the rule of law in Israel, to halt the limitless recklessness for the benefit of the gas tycoons, and to put up a glowing stop sign in order to defend the public and Israeli democracy," Shelly Yachimovich, a lawmaker from the center-left Zionist Union group, wrote on her Facebook page Sunday.
Information for this article was contributed by The Associated Press.
Business on 03/29/2016