Israeli Prime Minister Benjamin Netanyahu signed a major natural gas deal Thursday aimed at tapping large deposits in the Mediterranean, but a court challenge was expected over the contentious agreement.
Netanyahu has pushed hard for the framework deal setting out parameters for developing natural gas resources offshore with a consortium that includes US firm Noble Energy.
He has faced strong opposition from political rivals and others, who say the agreement amounts to a giveaway to the energy companies, and thousands having staged street protests against it.
Opponents are now expected to challenge it in the supreme court.
The deal comes at a time of serious concern over the cost of living in Israel, with the issue a major topic of debate in the run-up to elections last March.
"The deal is important for the economy, security and foreign relations," Netanyahu said before the signing.
Israel has faced increased pressure to move quickly after neighbouring Egypt's recent discovery of what was described as the "largest ever" gas field in the Mediterranean.
The Jewish state will seek to export a portion of the gas to other countries in the region.
The cabinet approved the agreement in August.
This week, a parliamentary committee voted against allowing it to bypass usual antitrust oversight, but the vote was non-binding.
Israel's monopolies commission has warned that the agreement could give Noble and Israeli partner Delek an effective monopoly. The companies agreed to sell some of their other assets as part of the deal.
To sidestep anti-trust objections, Netanyahu has used an obscure clause allowing thedeal to be pushed through by the economy minister -- a portfolio he holds.
He has done so in part by citing security concerns, saying Israel must increase its sources of energy to prevent supplies being cut by attacks.
- Two resignations -
Economy Minister Aryeh Deri resigned in November after refusing to overrule the anti-trust authorities. Earlier this year, antitrust commissioner David Gilo quit over his opposition to Noble and Delek's dominant position.
Israel has been trying to extract offshore gas since the discovery of the Tamar and Leviathan fields in 2009 and 2010. Production has begun in Tamar, but the far larger Leviathan has been hit by a series of delays.
The size of the Leviathan field is estimated at 18.9 trillion cubic feet (535 billion cubic metres, or bcm) of natural gas, along with 34.1 million barrels of condensate.
Noble and Delek also control the Tamar field, which holds 250 bcm of natural gas, and lies 80 kilometres (40 nautical miles) west of the Israeli port of Haifa.
Noble welcomed the signing of the deal, saying it "establishes the regulatory certainty and stability necessary to proceed with development of both the Tamar expansion and Leviathan, while providing transparency for future domestic pricing and natural gascompetition in Israel."
Political and regulatory uncertainty have been major concerns for the energy industry in the development of the fields, with debate having dragged on for years.
Discussions between the government and the consortium in reaching the deal centred on natural gas pricing for Israeli reserves and future production.
Under the deal, the price of gas for domestic use will be linked to an energy index.
The consortium is also said to have agreed to invest $1.5 billion to develop Leviathan over the next two years. Its failure to do so would allow the government to back out of a commitment not to alter fiscal and regulatory terms for the gas industry until 2025.
