Comptroller urges government to wait on contentious gas deal

June 30:

Yosef Shapira asks Energy Minister Yuval Steinitz to delay vote until after his report is published

Gas rigs in the Tamar field, off the coast of Israel, in June 2014. (Moshe Shai/FLASH90)

State Comptroller Yosef Shapira on Tuesday asked Energy and Water Resources Minister Yuval Steinitz to delay a parliamentary vote on a controversial gas deal between the government and a US-Israeli conglomerate that would see it exempt from antitrust laws as it develops Israel’s offshore gas fields over the next several years.

The Israeli Delek Group and US-based Noble Energy that are together developing the Leviathan, Tamar, Tanin and Karish gas fields in the Mediterranean Sea have been accused of being a monopoly and a “cartel” by Israel’s former antitrust commissioner.

On Sunday, the cabinet decided to overrule a call from the country’s regulatory agency calling to limit the dominance of the companies in the industry. But on Monday night, a parliamentary vote was postponed indefinitely after Netanyahu failed to cobble together a Knesset majority to pass the legislation.

Shapira’s request came after Steinitz revealed outline details of the proposed arrangement with the companies.

State Comptroller Yosef Shapira, (photo credit: Flash90)

“It is my intention to give you and other monitors later this week the draft of an updated report on the subject of developing the natural gas infrastructure,” Shapira wrote. “I will thank you if the government decision on the arrangement is made after the report is published.”

Shapira noted that he was working to have the full report published as soon as possible, but did not give a target date. It is expected to take several weeks.

Earlier Tuesday, Steinitz gave a press conference to explain the outline plan for regulating the country’s natural gas resources.

Under the terms of the deal, the two companies would retain control over the Leviathan gas field, the largest of the four, but must sell off part of their ownership in the Tamar, Tanin and Karish fields.

Minister of Energy and Water Resources Yuval Steinitz presenting the guidelines for regulating the country’s offshore natural gas reserves at a press conference in Jerusalem, June 30, 2015. (Yonatan Sindel/Flash90)

While the Tamar sale would be completed within six years, the Tanin and Karish sales must be done within 14 months, Steinitz noted.

“The outline is good for the country and good for the citizens,” Steinitz said, emphasizing that the gas companies invested “hundreds of millions of dollars” in developing the fields.

However, MK Shelly Yachimovich (Zionist Union), a fierce opponent of the deal, criticized Prime Minister Benjamin Netanyahu’s handling of the issue and the terms.

“Now it is clear why Netanyahu did everything in his power to hide the outline until the Knesset vote: He negotiated for months, gave the gas companies everything they wanted — without making a single significant achievement. The public has heard a collection of lies and mistakes, the monopoly is stronger than ever, there is no proper control over prices and the companies are being given a list of unjustified and unforgivable benefits,” she said

Sunday’s cabinet decision, unratified as yet by parliament, awarded the Noble-Delek group immunity from the Israeli Antitrust Authority for a period of 15 years and allowed the energy giants to keep their majority holdings in the Leviathan offshore gas reserve until 2030, even if the reserve becomes Israel’s only source of natural gas, the Haaretz daily reported Monday.

Noble and Delek have been selling gas to the Israeli market from the Tamar field, which went online in 2013, and have agreed to sell to neighboring countries as well. The Leviathan field, the largest gas field in the Mediterranean, has not yet been developed.

Last year the Noble-Delek partnership was branded a de facto monopoly by Antitrust Commissioner David Gilo, who announced his resignation six weeks ago over the issue.

The future forced sales are aimed at opening the industry to competitors. The deal also sets a price ceiling for future sales to Israeli companies and commits the gas firms to complete the development of the Leviathan gas field by 2019.

But critics say the deal might in fact strengthen the gas monopoly, because the companies will maintain a de facto monopoly over the Tamar field for the next six years before embarking on a similar partnership to develop the Leviathan field.

Environmentalists have also voiced opposition to the plan, saying that increased competition would encourage the industry to use more environmentally friendly resources.

Source: http://www.timesofisrael.com/comptroller-urges-government-to-wait-on-contentious-gas-deal/?

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