(MENAFN- Gulf Times) Bank of Israel Governor Karnit Flug has come out in support of the government's proposed natural gas development proposal, saying it will reduce investor uncertainty and make energy markets more competitive.
Flug's support should help Prime Minister Benjamin Netanyahu get the blueprint approved by his ministers and parliament. While the plan requires developers to reduce stakes in offshore fields, critics say it doesn't go far enough to end monopolistic ownership of the reserves.
"The outline arranges a variety of issues related to the natural gas economy that were subject to uncertainty, thereby enabling more stable regulation of the natural gas market, which will make it easier to advance the financing and development of the reserves," Flug said at a closed presentation at the Supreme Court in Jerusalem on Thursday, according to an e-mail from the central bank. "As such, the Bank of Israel supports the main points of the outline and progress toward its implementation."
Disputes over ownership and pricing have held up the production of gas from Leviathan, the country's largest reserve, and delayed expanded operations at the smaller Tamar. The failure to implement a gas strategy for the fields in the Mediterranean Sea has complicated export deals and antagonised investors.
The plan would require Texas-based Noble Energy Inc and Israel's Delek Group Ltd, the primary owners of Leviathan and Tamar, to sell two smaller fields, Karish and Tanin. The proposal also forces Delek to sell its stake in Tamar, and Noble to reduce its share, while allowing them to retain control of Leviathan.
Israel antitrust commissioner David Gilo resigned in June over the gas proposal, saying it favours developers over consumers. Netanyahu had planned to bring the blueprint before parliament last month but backed off, lacking majority support.
Energy Minister Yuval Steinitz said last month that the cabinet is expected to vote on the plan in August, then send it to parliament for final approval.
"Before final approval of the outline, it is important that milestones be set for advancing the development of the Leviathan reserve and connecting it to the Israeli gas market," Flug said. If delays in developing the gas fields prevent the creation of a "more competitive" market, then the government must establish a mechanism to protect Israeli consumers from "monopolistic pricing," she said.
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