AMMONNEWS - Israel has committed to Jordan that it will give Jordanian natural gas needs preference over Israel’s in times of shortages, according to a letter signed by Prime Minister Benjamin Netanyahu and Energy Minister Yuval Steinitz.
Details of the letter, obtained by Haaretz columnist Nehemia Shtrasler, were published Tuesday in Haaretz’s Hebrew edition after government ministries refused to confirm that the letter existed at all.
The letter commits to Amman that the quantity of gas exported from the Leviathan offshore reserve will not drop under the contractually agreed volume for the duration of the 15-year contract.
The contract was signed by Jordan’s National Electric Power Company and the U.S. based Noble Energy, part of the partnership that holds the license to the Leviathan reserve.
Leviathan is controlled by Noble and Israel’s Delek Group. In September, the partners agreed to supply NEPCO with natural gas for $10 billion, a major deal intended to enable the development of the reserve.
Before the details of the letter became known, the lack of transparency raised concerns about what Israel had committed to. It was unclear whether the policy contained a commitment to exempt the Jordanian deal from any Israeli regulatory changes, as Noble had promised.
Israel promised not to let exports to Jordan drop below 3 billion cubic meters a year, even if Israel was short on gas for its own uses. Over the past several years, Egypt has reduced the amount of gas it supplies the Jordanians, after it emerged that Egypt needed to reserve gas for its own people.
According to Israeli law, the energy minister may order companies extracting natural gas to give preference to Israeli consumers in times of need. The law does not address what would happen if the government gave preference to exports over Israeli consumers.
Since the ministries are refusing to confirm that the agreement even exists, the exact formulation is unavailable for review. This approach is strange, given that the water agreements between Israel and Jordan have been made public.
The Movement for Quality Government petitioned the Energy Ministry this week and asked for a copy of the commitment, in keeping with the Freedom of Information Law. Foreign banks have said that they would agree to fund Leviathan’s development only if diplomatic agreements protected it from political uncertainty.
Jordan’s government refused to sign a direct agreement with Israel committing to the gas purchase, due to the sensitivity of its dealings with Israel.
Likewise, the gas is not expected to be sold directly from Israel to Jordan, but rather through a middleman named NBL Jordan Marketing. The company would not be registered in Israel; as a result, it’s not clear to whom Israel would be making a commitment to maintain export volumes.
The letter signed by Steinitz and Netanyahu preceded weeks of intensive negotiations between Israel and Jordan, with U.S. mediation.
Approval from the Israeli and Jordanian governments should give the green light for funding Leviathan’s development, and thus let the company’s board make a final decision on the investment. It has until February 20, the final date by which Leviathan’s majority shareholder, Yitzhak Tshuva’s Delek Group, can decide to withdraw its investment in the project.
The Israeli commitment is thought to have prompted the sides to sign a sales contract that would then enable the reserve’s development.
Noble CEO David Stover said Tuesday the company intended to be producing gas from Leviathan by the end of 2019.