Israel unveils controversial plan for tapping natural gas fields

Israeli Energy Minister Yuval Steinitz unveiled Tuesday details of a plan to allow the U.S. and Israeli gas conglomerates to keep their control of the country's largest natural gas field, Leviathan, while opening the gas market for new competitors.

According to the outline, Texas-based Noble Energy and Israel's Delek Group, which currently hold all the newly discovered gas fields offshore Israel, will keep their control of Leviathan, Steinitz told a news conference in Jerusalem.

The outline was unveiled after Prime Minister Benjamin Netanyahu failed on Monday to secure a majority to pass a motion in the parliament to enable the government to endorse the proposed outline, in what was seen by many commentators as the biggest political crisis experienced by his newly-formed coalition.

Critics say that the proposed outline put gas prices above the average price in the United States, and secure the monopoly of Noble and Delek over Israeli gas.

The companies will be forced to sell their stake only in the smaller gas fields, which constitute together less than ten percent of the entire gas reservoirs. They will still control the largest gas field, Leviathan, as well as some of Tamar.

On Saturday, thousands of Israelis rallied in Tel Aviv against the deal, charging it "robs" the citizens from their natural resource.

The aim of the protest, according to the organizers of the event, was to make their voice heard against what they charge as the lack of transparency in the making of the deal.

The protesters also criticized parts of the deal, which were leaked to local media, as strengthening the control of the energy tycoons over natural gas without proper regulation and with foreseen rise in prices for Israeli consumers.

In December, head of the Israeli Anti-trust Authority David Gilo ruled that Noble and Delek constitute a monopoly.

Last month, he resigned over what he dubbed the government's "refusal to end the monopoly on gas drilling." He didn't agree with the outline, and said it destroys his attempts to "break up the stronghold of the Noble and Delek groups over gas extractions in Israel."

Netanyahu commented Tuesday on the deal shortly before it was released, accusing its opponents of "populism."

"Today, after years of discussions, we will present the outline that we formulated on extracting gas from the sea," Netanyahu said during a meeting with the Italian Prime Minister.

"This outline breaks up the gas monopoly and will put hundreds of billions of shekels into the treasury for Israeli citizens' social welfare, health, education and many other needs," he said.

Leviathan was discovered in 2010 and holds an estimated 22 trillion cubic feet of natural gas, making it the largest off-shore gas discovery in the last decade. Gas production is yet to begin.

According to the outline, Delek will have to sell its entire stakes in a second large gas field, called Tamar, within six years, and Noble will have to decrease its holdings to 25 percent, compared to it current 36 percent stake.

Both companies will also have to sell two smaller gas fields, called Karish and Tanin.

Unlike in European countries, there will be no supervision on gas prices in Israel, according to the plan. Instead, Steinitz said a maximum price will be set at around 5.4 U.S. dollar per energy unit. Endit