Israeli PM sets aside anti-trust ruling, gives go-ahead for Leviathan gas field

* Leviathan is potentially Israel's largest natural gas field

* Supreme Court to decide on legality of deal (Adds details, PM/analyst/Noble comments)

By Steven Scheer

JERUSALEM, Dec 17 (Reuters) - After years of political infighting, Israeli Prime Minister Benjamin Netanyahu signed a deal on Thursday giving long-awaited approval for the development of the Leviathan natural gas field off Israel's coast.

But if and when the field actually gets developed is now in the hands of Israel's Supreme Court. It (Other OTC: ITGL - news) will decide in the coming months on the legality of the agreement after opponents filed an injunction request.

As part of the deal, Texas-based Noble Energy (NYSE: NBL - news) and Israel's Delek Group (Other OTC: DGRLY - news) , which discovered Leviathan in 2010, will retain control of the field, but are being forcing to sell other, smaller assets.

Critics, including the Israel Antitrust Authority, argue that control of the country's gas reserves by one consortium will limit competition.

Netanyahu pushed the agreement through by invoking a never-before-used clause in the anti-trust law that allows for decisions of the Antitrust Authority to be overridden in the name of national security and international diplomacy.

"This (deal) is important for the economy, for security, for society and for our external relations," he said at the signing ceremony, adding that he would soon meet Cypriot and Greek leaders to discuss energy matters in the Mediterranean.

Noble Energy said the deal "establishes the regulatory certainty and stability necessary to proceed with Leviathan" as well as the expansion of the nearby Tamar field, where Israel currently gets its gas for generating electricity.

POTENTIAL CUSTOMERS

Leviathan, with estimated reserves of 622 billion cubic meters, will cost at least $6 billion to develop. It is meant to begin production in 2018-2020, although that timetable looks ambitious, and supply billions of dollars' worth of gas to Egypt and Jordan, and possibly Turkey and Europe. )

Last month, Energy Minister Yuval Steinitz said he met with more than 20 firms including ENI (NYSE: E - news) , Shell (LSE: RDSB.L - news) , Hess , Exxon Mobil (Swiss: XOM.SW - news) and EOG in a bid to entice them to invest in Israeli fields off its Mediterranean coast.

Some may be deterred, however, by the anti-trust battle.

"The court will want to examine it quite closely and tread carefully," said Michael Barron, director of global energy and natural resources at Eurasia Group.

"The anti-trust issues have been going on for a year and it has not cast foreign investment in Israel in a good light. It definitely has the potential to scare away investors and (make them) think twice when it comes to large energy and infrastructure projects."

Sharply lower oil prices have slashed capital investments by global energy and exploration firms, and other liquefied natural gas projects are set to come online in the next three to five years, which could lead to an oversupply.

But Israeli officials and business leaders said Leviathan would ultimately boost the state's coffers significantly and help companies improve competitiveness by reducing their energy costs. (Reporting by Steven Scheer; editing by Luke Baker and Mark Trevelyan)