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Amid Noble flap, Israel recruits U.S. oil firms

HOUSTON – Israel is working to persuade more U.S. energy companies to invest in its growing offshore fields, saying a fractious delay to Houston-based Noble Energy Inc’s massive Leviathan natural gas project will soon end if a new regulatory regime takes effect.

Israel Energy Minister Yuval Steinitz said U.S. companies should not be turned off, even as Noble threatens to take Israel to arbitration and demand billions of dollars in lost future revenues if Leviathan – one of the world’s largest offshore discoveries of the past decade – does not soon receive final approvals.

A new policy framework, designed in part to alleviate anti-trust concerns that Noble and its partner Delek Group Ltd would control too much of Israel’s gas supply if Leviathan were to start up, has been approved by the Cabinet and parliament.

“What’s left now in order to put it into action is just the signature of the minister of economy,” Steinitz told the Reuters Commodities Summit late Tuesday. “I am confident that in the near future, until the end of this year, and hopefully in the next few weeks, this will be over and the framework will be finally in place.”

The economy minister, Aryeh Deri, has not given clear signals in recent days that he will sign it to end years of delays.

Steinitz said he wanted to see Leviathan’s gas flowing and not tied up in arbitration.

“I hope the threat will no longer exist soon,” he said.

Related: Israel gas agreement moves another step nearer

Israel, which has gone from an energy dependence to a potential exporter, currently receives its gas for electricity generation from the Tamar gas field, which began production in 2013.

The new framework will involve Noble and Delek reducing stakes in Tamar.

These types of changes, made after billions of dollars have been invested, often rankle companies.

Steinitz said the new regulatory framework better prepares Israel for big energy discoveries that have a good chance of growing larger – bringing huge tax and royalty revenues and potentially allowing it to become an energy exporter.

“We hope to encourage other companies. This is the main reason for my visit to Houston. To explain to them the potential and attractiveness of investing in Israel,” Steinitz said.

Oil is thought to sit in deeper rock below the gas field that sits 80 miles (130 km) off Israel’s Mediterranean coast.

And there is talk that Egypt, Israel and Cyprus could develop a subsea pipeline to supply Europe with gas and wean it off supplies from Russia.

Leviathan could be part of that.

“Prime Minister Netanyahu is taking this very seriously because it is vital for the state of Israel, for our energy security, and for the Israel economy,” Steinitz said.

(Reporting by Kristen Hays and Terry Wade; Editing by Marguerita Choy)

This article was from Reuters and was legally licensed through the NewsCred publisher network.