Israeli cabinet revises contentious offshore gas deal

The Israeli government on Sunday approved changes to a major offshore gas deal with a US-led consortium after the country's supreme court rejected an earlier version of the accord.

The deal is intended to clear the way for Israel to both bolster its energy supplies and become a gas exporter, which could provide it with strategic leverage in the turbulent region.

"The new agreement incorporates the comments that we received from the supreme court," Prime Minister Benjamin Netanyahu told the weekly cabinet meeting, according to a statement from his office.

"This is a very important -– even historic –- step for the Israeli economy ... and we will use this gift that nature has granted us for the benefit of the state and its citizens."

After protracted political and bureaucratic challenges to the deal, including objections from anti-trust officials, the supreme court in March struck it down.

The case had been closely watched, with Netanyahu himself  appearing before the justices on behalf of the government.

The court objected to a clause which guaranteed that its provisions could not be changed for a decade.

It ruled that such a pledge would limit the authority of future administrations, and the court gave the government a year to amend the agreement with Texas-based Noble Energy and Israel's Delek.

A cabinet statement quotes the revised version as recognising "the need for a regulatory environment that encourages investment by international and local companies in the field of natural gas exploration and production."

Israeli business daily Globes said the agreement now pledged "to act in favour of regulatory stability for 10 years in the gas sector, but does not guarantee that nothing will be changed in taxation, ownership of the (fields) and exports."

It said compensation would be considered for the companies involved if changes occur.

The court is expected to review the new version of the deal.

Delek on Sunday welcomed the cabinet decision and said it intended to have gas flowing from the Mediterranean field known as Leviathan "to the local market by the end of 2019".

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

It is estimated to hold 18.9 trillion cubic feet (535 billion cubic metres, or bcm) of natural gas, along with 34.1 million barrels of condensate.

Key potential markets include Turkey and Egypt.