Israel close to sealing offshore gas deal after compromise

Jerusalem: Israel is expected to finally ratify a deal to put a major offshore gas field online, the energy ministry announced, after a compromise was reached with the US-led consortium of developers.

The supreme court in March struck down a complex agreement on development of the Leviathan gas field, off Israel's Mediterranean coast, with justices objecting to a clause that guaranteed the terms of the deal would not change for a decade.

The court ruled that such a pledge would limit the authority of future governments.

Energy Minister Yuval Steinitz announced Wednesday a compromise had been reached.

He said in a statement that the amended deal would be put before ministers in the coming days, with the next opportunity likely to be Sunday's weekly cabinet session.

Eytan Sheshinski, a professor at Jerusalem's Hebrew University who headed a government-backed committee on the terms of the deal, said Texas-based Noble Energy and Israel's Delek and had "given up their requirement of a legal binding condition of no future changes".

In exchange, he said, the government "declared its intention not to make any further changes and that they will consider positively compensation if needed."

"I think that is a reasonable outcome."

Yossi Abu, chief executive of Delek's drilling division, said on Sunday that his firm was determined to see the deal come to fruition.

"Israel has a great potential to become a reliable exporter of natural gas, both to its neighbours in the region and to Europe. The window of opportunity is limited and we are determine to implement it," he said.

Leviathan is the largest of Israel's offshore gas fields, with enough gas to turn the country into a significant exporter.

Key potential markets are Turkey and Egypt, with plans to utilise two underused gas plants in Egypt.

Israel also announced Wednesday the successful trial of a weapons system to protect offshore rigs, the closest of which is just 30 kilometres (19 miles) from Gaza.

Hamas, which runs the Palestinian enclave, unsuccessfully targeted the rig during the 2014 war with Israel, but the army said the new system, dubbed the Iron Dome of the Sea, would shoot rockets out of the sky.

Both oil and natural gas prices have plunged sharply in the past 18 months, and Amit Mor, chief executive at the Eco Energy consulting firm, said investors may be wary of spending billions to develop the Leviathan field unless prices rebound.

"With very low LNG prices and the fact that the development will take three or four years, it is not clear whether the international companies will be willing to commit and invest $2-3 billion for a pipeline," he said.